Category Archives: Basketball

04.04.12
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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.

03.30.12
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News for 3/30/12

For the end of the week:

  • The NBA is stepping in to pay $3.25 million in predevelopment costs on the Sacramento ESC project after the Maloofs refused, saying that they shouldn’t have to pay since they’re tenants. It sure sounds like the Maloofs don’t see themselves as stakeholders in the arena, which is a bad sign. Everyone should be rowing in one direction. A group has organized to force the plan to a vote.
  • AEG’s downtown LA stadium plan seems to be stalled, as the company and the NFL can’t agree on terms for what AEG’s contribution and minority share should be. Now that the Dodgers ownership saga is ending, there are renewed calls for a stadium in Chavez Ravine, either to sit next to or replace Dodger Stadium.
  • The Giants unveiled several improvements to AT&T Park. The big changes are the new sponsor for the mezzanine club level, Virgin America, and the transformation of one of the field boxes down the first base line into the “Corona Beach Bar”, complete with sand. The narrow bridge on the promenade level next to the Fan Lot will finally be expanded. In addition, concession carts on the promenade level will be moved to the back walls, which will open up views of the field from the concourse.
  • Peter Guber, Warriors co-owner, may end up partnering with the Giants on an arena in SF, while the Giants compete with Guber’s Dodgers.
  • Rangers Ballpark will be serving a $26 hot dog this year. No, it is not made of unicorn meat.
  • Ray Ratto gives his thoughts on what the Dodgers sale might mean for the Giants and A’s.
  • The Atlantic compares two cities, Denver and Phoenix, and how building ballparks has impacted their respective downtowns. (thanks hecanfoos)
  • Defying convention, the Census Bureau lists the three most densely populated areas in the U.S. as #1 Los Angeles, #2 San Francisco/Oakland, and #3 San Jose. There are flaws in the methodology, in that #5 New York City includes all of the suburbs in New Jersey and Connecticut, but SF/OAK doesn’t include the 680 corridor or any of the North Bay besides parts of Marin County. History and trends have largely defined the specific urbanized areas the Census uses in its surveys.
  • Memphis Grizzlies owner Michael Heisley will not sell the team to Larry Ellison because of Ellison’s continued interest in moving the team to San Jose. From the article:

Heisley is asking $350 million for the Grizzlies and says he makes it clear with potential buyers that the team’s arena lease with the city and county is rigid. There are several clauses and financial penalties that make it a daunting task to move the Grizzlies before 2021.

  • The NY Post’s Peter Vecsey reports that David Stern was in SF “inspecting building plans and the site” for an arena across from AT&T Park. He also notes that Larry Ellison was not daunted by the cost to break the FedEx Forum lease, though that’s not exactly easy to prove or disprove.

More as it comes. Probably no new posts until Monday at the earliest unless big news breaks.

03.18.12
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Ellison in talks to buy Memphis Grizzlies

Oracle CEO and billionaire Larry Ellison has been getting some sun down in Indian Wells, where one of his sports properties, the BNP Paribas Open tennis tournament, has been going on for the last two weeks. That hasn’t stopped him from accelerating his quest for an NBA franchise. The basketball fan almost bought the New Orleans Hornets with the possible intent to move the franchise to San Jose. After those overtures were denied by the league, he’s back to buy another Southern team, the Memphis Grizzlies. CSN Bay Area’s Matt Steinmetz reports that Ellison has a “handshake agreement” with current Grizzlies owner Michael Heisley to acquire the franchise.

The Grizzlies are locked into a lease at FedEx Forum through at least 2017, so there’s no chance of Ellison being able to relocate the franchise immediately (if he wanted to). The Merc notes that Heisley’s asking price is $350 million, a $40+ million premium over the franchise’s most recent Forbes valuation. That figure is also in line with the amount the NBA is looking to get for the Hornets, who are expected to be sold to a consortium headed by LA businessman Raj Bhathal sometime in the next few weeks.

Both Heisley and Ellison were expected to be bidders on the Dodgers. Only Heisley submitted a bid. Frequently criticized for being cheap in his tenure as Grizzlies owner, Heisley managed to end up on the short list of Dodger bidders, making it past the first two rounds after he teamed up with Tony Ressler.

The $350 million sales price appears to be the key for Ellison, as he bid lower than Joe Lacob and Peter Guber when the Warriors were put up for sale. That’s the same amount he bid on the Hornets in late 2010. Still, the franchise is in Memphis and is not going to move for a while if at all. With his interest tied up in the ongoing America’s Cup defense and running a NASDAQ-100/S&P 500 company, you have to wonder if Ellison would end up being something of an absentee owner. An hour jet ride to Palm Desert once a year is a lot more manageable than frequent four-hour trips to Memphis. Despite that “hardship” it’s clear that Ellison wants in on owning an NBA franchise, which is more than I can say for his supposed interest in baseball.

03.14.12
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A way to Sacramento

A year ago, Giants CEO Larry Baer hinted that it would be good for the A’s to look somewhere outside the Bay Area for a new ballpark, if a deal for an East Bay park couldn’t be worked out. I wrote three years ago that an expansion to Raley Field would cost at least $250 million. It would be hard for the A’s to make a large contribution towards the expansion project because Sacramento’s government town status makes the corporate revenue pickings slim. If the A’s are going to pay for it, and MLB isn’t going to pay for it, who will?

The Giants, of course.

Now, I’m not actually suggesting that the Giants will pay for the stadium directly. They’re coming to the end of their own mortgage, so why would they saddle themselves with someone else’s? They wouldn’t. Yet if the A’s were forced to vacate the Bay Area, the Giants would likely pay the A’s to surrender the territorial rights to the East Bay. Such money which could be used to build or expand a stadium elsewhere. The Giants would end up indirectly funding the A’s stadium as a result.

We’d start with the MLB standard compensation package: $75 million, half coming from the commissioner and half coming from the paying team. That’s too small of compensation for the 2.5 million-strong East Bay, especially when you consider that the Giants’ franchise valuation could get a 2-3x boost from the A’s leaving. $150 million is probably a fairer package with the same 50/50 terms.

By the time the A’s were able to consider such a move in 2016-17, the $250 million cost could easily balloon to $300 million. That puts the Giants/MLB contribution at half. The A’s might be able to contribute $75 million on their own (via a new lease and revenue share), meaning the rest would have to come from a public source. This is absolutely important so that the A’s don’t get relegated to being another small market team. If the A’s move to Sacramento and have to pay a fat mortgage, that’s not an improvement upon staying in Oakland. The A’s best chance to thrive in Sacramento is if their stadium costs are as minimal as possible.

For Sacramento’s part, the plan only makes sense if the Kings are gone. The A’s still need corporate support to sell out premium offerings, and it’s expected that the Railyards Arena will suck up all of those customers. Involvement of AEG will only enhance that. The controversial parking revenue play won’t work because the plan is to expand Raley Field in West Sacramento, which is out of the Capitol City’s jurisdiction. A joint powers agreement between Yolo and Sacramento Counties sounds like a possibility.

At the actual stadium, the hard work includes taking down the press box and suites, ripping up the concourse to put in new columns, and putting in new facilities under the concourse such as modern, MLB-standard team clubhouses and a kitchen/commissary. Then the A’s could focus on putting in a club level, new suites, an MLB-standard press box, and a third deck to bring in those extra needed seats. The scope of work reminds me of this:

Mount Davis added 10,000 seats in a three-deck grandstand, an expansive indoor club, and 96 suites. The scope of work is similar to what would be required at Raley Field (sans tarps).

Would $300 million be enough in the end? It’s hard to say. It would be easy to argue that MLB wouldn’t want to skimp on amenities, or else Raley Field could be viewed as a cheap, temporary solution. Terms published for Nationals Park showed that MLB wasn’t interested in cost effectiveness – except in terms of external finishings. Marlins Ballpark is a testament to excess with its bizarre center field sculpture and aquarium behind the plate. The “wedge” in the Railyards dedicated for the arena isn’t large enough for a ballpark, so if MLB weren’t satisfied with Raley and wanted to look in Downtown Sacramento, it would have to use another plot within the project area for a completely new stadium, and a $500+ million price tag to go with it. Unless MLB was really desperate (which they usually aren’t), it seems iffy for baseball go along with the expansion plan when Sacramento was willing to foot a large part of the bill for a brand new arena.

There’s also at least one inside baseball consideration. MLB is fully aware of what Sacramento’s market limitations are. If the Railyards arena deal falls through, it won’t look good to MLB that the City couldn’t put together either a cohesive local or regional plan to retain a team. Sacramento wouldn’t show up on the top of anyone’s “viability” list, even though the resources to support a baseball team alone are there. Yet if the arena deal were successful, the market is too limited to exploit for a second major sports franchise, especially one whose economic requirements are much greater than those for a basketball or hockey team. It’s definitely a strange paradox.

03.07.12
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3/6/12 News Analysis

First off, a quick acknowledgement of the unanimous approval of the Kings ESC arena deal by Sacramento’s City Council. Somehow, that happened a full hour before the Oakland approved its resolutions and expenditures for the Coliseum City project. There’s still a long way to go. The $255 million that Sacramento is committing to the project is the big semi-known. If KJ and company can put a deal together that doesn’t look too risky (and force a referendum because of that risk), they’ll be in pretty good shape. There are still issues of which route the City will go to come up with the $255 million (selling parking rights vs. raising bonds), the Maloofs’ ongoing debt, and the typical EIR mitigation stuff that will be identified in the coming months. Onward and upward.

I realize that my liveblog notes from the Oakland City Council meeting are so messy that they’re nearly incomprehensible, so I’ll boil the whole thing down to its essence.

1. The Council voted for a feasibility study and EIR, not to build anything.

Just to be clear, here’s the relevant language from last week’s committee report (emphasis mine):

The ENA [exclusive negotiating agreement] with the JRDV/HKS/Forest City development team will allow private predevelopment work to proceed for Area 1. The ENA between the City and the development team is for the purpose of determining the capacity of the development team to deliver on the project, and for studying and evaluating the feasibility of a new stadium development.

In other words, it’s a start. It’s not a promise to replace the Coliseum or erect a ballpark next door. It’s about determining whether this concept, Coliseum City, actually makes sense. Speaker after speaker brought up the legacy of major pro sports in Oakland, totaling 111 years (impressive). Some brought up the soul of the city, or how teams leaving could negatively impact the next generation of Oaklanders. Problem is that all these appeals to passion and soul at least indirectly led to the bad deal that the City and Alameda County got into in the first place with Mt. Davis. Ignacio De La Fuente has been consistent in his desire not to bend over backwards for any team, and that any team that wants a deal in what he considers the best land for a stadium in the Bay Area has to be an equal, willing partner. Or in this case, three equal, willing partners. Which brings me to the next issue…

2. The City Council is couching their words.

Libby Schaaf brought up the fact that the original resolution(s) did not specifically call for a project alternative in which no new stadium is built, so she asked for a rewording and got it. This request came after just about every other Council Member other than Larry Reid and Rebecca Kaplan (who was absent) talked about the “no stadium” alternative. That’s the case where either it doesn’t make sense to build a new stadium to replace the Coliseum, or no team is interested in such a stadium, or some other set of circumstances in which a stadium can’t happen. Those in the audience didn’t want to hear it – they want to hear about progress and results – but it’s a big step forward for the City Council. Last year I wrote about the adult conversation that Sacramento was having with its residents over the Kings future. Oakland is getting closer to having their own discussion, which will be all the more painful because it will involve three teams and choosing favorites.

However, the choices won’t be as simple as “build or don’t build”. There will be an array of choices, permutations, and even sites to consider. Assistant City Administrator Fred Blackwell noted at the outset that because the redevelopment money for the Coliseum City is supposed to be confined to that specific redevelopment area, it couldn’t be used outside the project area. Then Eric Angstadt clarified that all reasonable alternatives will be studied, including sites or options that may be outside Oakland. Who’s right? I guess we’ll find out. My immediate reaction is that if redevelopment is going away from a project/operations standpoint, what does it matter what redevelopment area it’s in?

3. 980 Park and the Ghost of Victory Court

I counted two mentions of Victory Court all night, one by Larry Reid and one by a speaker. It’s almost as if VC has been wiped from people’s memories. Just 14 months ago the Council Chambers was packed to the rafters and an overflow room was needed to hold everyone for a planning commission hearing on VC. This time, a third of the audience was on hand for a different, non-sports issue on the Council’s agenda, and they left when that issue was resolved. There were few people in the balconies, and there were plenty of seats available in the chambers for latecomers. I noticed that neither Let’s Go Oakland nor Baseball Oakland heavily promoted this session, so that may have something to do with the lower turnout.

On the other hand, 980 Park rose like a phoenix. Multiple West Oakland residents spoke in favor of it. Bryan Grunwald spoke out about it, as you’d expect. Nancy Nadel mentioned that her constituents were interested in it, and Jane Brunner pushed it forward. Brunner indicated that there were discussions with city staff about 980 Park’s feasibility, so since Coliseum City’s going through a feasibility study, might as well include 980 Park, even if it’s simply to find out if it makes any sense cost or time-wise. Redevelopment funding issue aside, it can’t hurt to include 980 Park as an alternative. One speaker rightly pointed out that if Coliseum City and its Oakland Live! concept became successful, it could seriously harm the existing downtown Oakland. Cities usually don’t have two downtowns, at least not successful ones. San Jose knows this well, as they forever killed downtown’s retail growth by approving Santana Row three miles away. Downtown Las Vegas is the low-rent, shopworn alternative to the glamour of The Strip. In the next year I can see the Council ask for a full economic impact report, explaining how creating a second downtown could have a complementary or deleterious effect on the original downtown.

…

That’s it for this early morning. I have a postscript item to tack on, but that will have to wait until the business day starts. Until then, comment away.

03.06.12
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More from Oakland City Council Session 3/6/12

Update 11:27 PM – Unanimous vote yes. Audience erupts in “Let’s Go Oakland” chant.

These are raw notes I’m taking as we go. Voting result will be posted at the top when it’s done.

Blackwell mentioned that because teams are in various discussions with other jurisdictions, plan should also include non-stadium alternatives.

Potential conflicts of interest with one contract provided for planning and development. Decoupling was necessary. So it’s #1 ENA for master planning, #2 for EIR

Urgency. A’s are actively pursuing San Jose. There are a number of obstacles. Giants have expressed opposition. Likely a public vote.

Raiders. They’ve expressed desire to stay with a brand new facility. They are being courted by a variety of interests in SoCal. NFL has been pushing a model with multiple teams playing in one stadium, which could be pursued in Santa Clara vis-a-vis 49ers and Raiders.

Warriors – have had discussions. Are farthest away from making a move. SF has been in discussions.

Funding agreement – funds came from Coliseum Redevelopment Area. Funds are limited to affecting Coliseum area, not available outside area. Funding includes a transfer of assets (redevelopment). Legislation (AB1X26) to eliminate redevelopment indicates that such transfers may be under review. According to City Attorney, actions with third party agreements should be protected from “clawback” (reclamation by state).

Eric Angstadt in response to question by Jane Brunner – Premature to say what will be studied, but all recommended alternatives will be studied in terms of project goals. There will be a report of which alternatives are studied and why. EIR process will study alternatives that are reasonable, including (potentially) sites outside of the city.

23 public speakers – No one against, do not see Bryan Grunwald. Mayor Quan wasn’t in the Chambers initially, now is in the back corner

Chris Dobbins – Save Oakland Sports

San Jose resident argues for Coliseum City as a Raider fan.

Keith Salminen – Not just Oakland’s problem. It’s East Bay’s problem. Future of the East Bay is at stake.

Dr. Death – Humbly ask to fund the studies. Can’t forget the past. 111 years of tradition gone forever. Devastating to the economy and pride. Will be expensive, but you have to spend money to make money. Project may be eligible for $40 million in TOD funds.

Black Hole guy from Brentwood

White guy in red A’s hat and Run-TMC Mullin jersey. If you get rid of the team you get rid of a big part of Oakland’s soul. What do you have left if there’s no soul?

One dissenter, didn’t catch his name – Doesn’t want two downtown Oaklands. Wants the ballpark to be down the street near downtown. Is he referring to 980 Park? Compares situation to Las Vegas with the old Vegas and The Strip.

Bryan Grunwald is here, is given 4 minutes. Supports resolution, argues for scope to be expanded. Ask to spend money on feasibility of 980 Park. Differs with Blackwell on limits of redevelopment funds. (If redevelopment ceases to exist, do the limits matter?) If there is a no-stadium alternative at Coliseum City, why not have the stadium downtown/uptown? To put all eggs in the Coliseum basket is ridiculous and a waste of public money.

Larry Jackson reminds Council that he proposed Coliseum City two years ago.

Jorge Leon spoke once, wanted to speak again but was told to sit down by Larry Reid.

Council members

De La Fuente – Supports resolutions. Understands passion of fans. We don’t have to bargain or beg for our teams because our site is the best. The teams are an asset, but they also want to be here. Can’t forget we are subsidizing the franchises for $10 million/year. We can do better next time. We are prepared to work hard, but it takes two to tango. It’s responsible to look at the no stadium alternative. We can’t force teams to stay. Hopefully we’re sending one more message tonight that we’re willing to work with MLB. Hopefully we’ll get the same in return.

Brooks – In the last year I think we’re making moves like we’re talking to the teams in a way they understand. Refers to opening of management of contracts for Coliseum, which she started.

Brunner – Congratulations Mr. Reid. He has been pushing the Coliseum (his district) as long as I can remember. The only reason we didn’t look at the Coliseum was that the A’s were saying they wouldn’t go there. I’m in total support of this. The reason I’m interested in (980 Park) is that there’s a chance that the A’s will still come back to us and say we’re still not interested in the Coliseum. Talking to staff offline, we need to understand the feasibility of doing it over the freeway. It’s good if we know the pros and cons.

Schaaf – We all want all of our teams to stay, but we don’t totally control that. We have to be mindful that there are other people who control those decisions. There will be scenarios if one or more of those teams don’t stay. Resolution does not include that kind of language, so will ask Blackwell to include it. Coliseum City doesn’t adequately describe how big it is.

(Angstadt clarifies that non-stadium alternative will be specified in the professional services contract.)

Reid – Nobody’s spent more time on this than I have. I tried to get Dan Lindheim to see it, he wouldn’t. I tried to get Jerry Brown to see it and he wouldn’t. Thanks to the Mayor and to Jane Brunner for writing the letter to MLB.

Nadel – Constituents support 980 Park as part of study.

Reid – If we do nothing then we will lose every sports franchise in our city. When we first sat down with Lew Wolff and showed him our vision of Coliseum City, he took it down to San Jose (sic) and came up with the 66th-High Street. If we give MLB two options and MLB tells him, “Here are two options, take one or put the team up for sale,” Oakland would never be the same. (Referring to Coliseum City and Victory Court). I’m glad that someone caught the vision. I just hope it’s not too late.

Unanimous vote yes. Audience erupts in “Let’s Go Oakland” chant.

On the way out I introduced myself to Bryan Grunwald and held the door for Desley Brooks as she left City Hall. If there were any winners tonight, they were Brooks and Reid.

03.06.12
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Oakland City Council Session 3/6/12: Coliseum City Feasibilty Study

Today’s Oakland City Council meeting began at 5:30, with the non-consent part set to start at 6:30. The last item for the night is the S-13, regarding approval of a two-part expenditure for the Coliseum City feasibility study. Here’s the item as described in the meeting agenda:

Subject: Oakland-Alameda County Coliseum Complex From: Office Of Neighborhood Investment Recommendation: Adopt The Following Pieces Of Legislation:
1) A Resolution Authorizing An Exclusive Negotiating Agreement With JRDV Urban International, HKS Sports And Entertainment, HKS Inc., And Forest City Real Estate Services LLC, Or Affiliated Entities, For Development Of The Coliseum City Project At The Oakland-Alameda County Coliseum Complex And Environs, And Authorizing Predevelopment Funding Of The Developer’s Planning Work In An Amount Not To Exceed $1.6 Million; And
(11-0291)

2) A Resolution Authorizing A Professional Services Contract With Lamphier-Gregory And Team Of Consultants, In An Amount Not To Exceed $1,900,000, For Services Related To The Oakland Alameda Coliseum Complex And Environs And The Oakland Airport Business Park Specific Plans And Environmental Impact Report Without Return To Council
(11-0291-1)

The Coliseum City plan is actually divided into two project areas. Area 1 is the Coliseum complex and several adjacent pieces of land, including the HomeBase acquisitions and parcels in between the complex and BART station. Area 2 is much of the land on the other side of the Nimitz, which includes Zhone among other pieces. The total expenditure of $3.5 million is relevant to Area 1, because item #1 is for the planning aspect and item #2 is earmarked for the EIR work.

Approval of the contract will give the respective parties 12-18 months to complete their work. That does not mean that further EIR work won’t be required. Any new buildings, such as a third sports venue, hotel, or office building(s) will require at the very least a supplement onto the plan EIR. It’s possible that if a new Coliseum were to replace the old one without an additional ballpark or third venue, a supplemental or additional EIR wouldn’t be needed. It’s not really worth discussing further until Oakland has to cross that bridge.

In keeping with other large scale planning and EIR work, I expect that we won’t see a draft document for at least a year. If the stakeholders, including the pro sports franchises, are interested and willing to play ball, we could see action regarding a deal after that point.

I’ll be at the meeting at 6:30 or so. Hope to see a lot of sports fans there. I’ll update this space as news comes.

Update 6:41 PM – Arrived. Council has item S-11, Alameda County Transportation Expenditure Plan, up right now. Below is a picture of the Council Chambers.

20120306-184411.jpg

Quick observation: Mostly Raiders gear in the not-full crowd, with a smattering of A’s and W’s garb. Obviously there’s overlap.

Update 7:04 PM – Coliseum City item is now up! And there are 43 speaker cards! Settling in. Wait, they’re dealing with the strange Desley Brooks teen center matter first. That item (S-10) has the 43 speaker cards. No hope of getting out of here before 9.

Update 8:16 PM – Quote of the night from a speaker yelling at the City Council meeting: “SHOW ME WHERE THE PROBE IS!!!!”

Update 10:08 PM – FINALLY the teen center thing is over. At least a third of the audience has left. Now it’s on to Coliseum City. 25 speakers, mercifully. This should be a slam dunk. Assistant City Administrator Fred Blackwell is describing the project.

03.02.12
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Parsing the Kings Arena term sheet

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View from the northeast has realigned rail lines and platforms to the right, original train station on the other side of the arena. Does the arena look like Staples Center? If it does it's probably no coincidence.

Late last night, the long-awaited nonbinding term sheet and working report for the Sacramento ESC (Kings Arena) were released to the public. The term sheet itself is 18 pages long, so thankfully the City included a two-page summary. From reading the entire thing, I took away a few items.

Breakdown of contributions to be made by the various stakeholders

  • There’s still a lot to figure out. While the term sheet clearly spells out the initial contributions to be made by the Kings ($73.25 million) and AEG ($58.75 million), there’s no sense of what rent either party will pay to the City. That detail doesn’t have to be revealed until April 15.
  • A new item, which has surfaced in the last few weeks, is the requirement of a 1,000-space parking garage near or adjacent to the arena. It appears that AEG requested this in order to satisfy potential premium seat/suite buyers. The garage will cost $25 million to build and will be funded by a combination of City downtown improvement funding (MOPA) and money from developer ICON-Taylor. The catch is that AEG is committing to leasing all of the spaces for the duration of the arena lease.
  • Predevelopment costs will cost $13 million, with half of it paid by the City and 25% shares to the Kings and AEG.
  • AEG and the Kings will split possessory interest (property) taxes, though it appears that those funds will be used to service debt (PILOT).
  • The NBA All Star Game will be held at the arena within three years of opening.
  • The team name must be “Sacramento ____”.
  • The 5% ticket fee on Kings events would be part of the Kings’ ongoing contribution, a corresponding fee on non-Kings events would be part of AEG’s contribution.
  • The Kings would get “net parking revenues” for games, the City would get that revenue from non-game events.
  • An additional $1 facility fee would go towards a capital improvements fund.
  • Power Balance Pavilion would cease to operate once the new arena started operating.
  • Opening date target is September 2015.
  • The EIR is expected to be completed in 12-14 months, though that partly depends on whether the arena has its own project-level EIR or is folded into the Railyards EIR as a supplemental piece.

For me, the most surprising news is the greater planning stuff. As part of previous plans for the Railyards, the tracks were to be realigned away from the train station, so that they form a sort of triangle framed by the new tracks to the north, H Street to the south, and 7th Street to the east. The arena is meant to fit inside that triangle. As you can see from the aerial shot below, some of the infrastructure has already been built, such as the platforms and new bridges for 5th and 6th streets that will extend over the tracks.

The realignment means that if you want to access the tracks from the station, you’ll have to walk under the width of the arena to do so, some 800-900 feet. It’s strange and perhaps a bit taxing, but kind of cool when you think about it. Light rail will remain adjacent to the old station.

Now that we know the upfront contributions and what the City expects/hopes to get from selling its parking revenue, we know what’s really at stake: $255 million. That’s the amount that the City is pledged to provide if the project moves forward. If the City can get $230 million upfront ir projects is the present value of parking revenue, then everything lines up. Just in case it doesn’t, the City is considering floating normal revenue bonds for the project. Over 30 years at 7%, that comes to $18 million per year. The City, with help from Sacramento County, is moving money around to protect against the project hitting the General Fund. Parking revenue provides around $9 million per year to the General Fund. To its credit, the City has listed the various project revenue sources that will be used to offset that $9 million. That includes the aforementioned 5% ticket tax revenue, the City’s parking revenue from non-King events, and various other sources. Where the math gets fuzzy is that if the Kings are getting the parking proceeds while they’re playing, that’s a huge chunk that isn’t going to the City ($2.64 million). Plus there’s the other $9 million that will be needed to service the debt. Is all of that to be provided by the Kings and AEG?

I have some confidence that in the coming months, the stakeholders will be able to whittle away at the doubts and come up with solid, if not airtight, plan. The City is expected to vote on the term sheet next Tuesday, which gives them little time to review it. Fortunately, no serious commitment needs to be made for at least another 10 weeks, while the lease details are worked out. Unfortunately, that’s also how the 49ers plan was put together. To be continued…

02.29.12
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News for 2/29/12 (Leap Day)

A good amount of stuff to report today:

  • Oakland’s CEDA Committee approved an action to have the City Council vote on EIR funding for Coliseum City. The City Council will take up the action next Tuesday night. A’s Fan Radio did a stalwart job of covering today’s proceedings. A similar action was taken prior to the City Council voting on Victory Court in December 2010. If the City Council approves the expenditure, two things need to happen: A) The work has to actually happen, unlike Victory Court, and B) A plan must be clearly articulated to show how the teams and venues will be accommodated. That last bit is probably the most important to the leagues, who are the real gatekeepers. Update 12:10 PM: As Bryan Grunwald notes in the comments, the 980 Park concept will be included as an alternative.
  • The Santa Clara City Council approved the 40-year ground lease for the 49ers stadium. This was considered a formality because the Council approved the lease to the Stadium Authority, which is simply the City Council wearing different hats. The interesting note to come out of the session was dissenter Jamie McLeod’s mentioning the ongoing California Supreme Court case over a potential new referendum. The case could be decided in the next week.
  • A new grassroots group trying to keep all three teams in Oakland has been formed. The group is called Save Oakland Sports. Seems a bit late to do something like this, but it can’t hurt. Besides, Baseball Oakland has gone largely dormant since the Victory Court plan was scrapped.
  • Frank McCourt has been unwilling to sell the parking lots surrounding Dodger Stadium, and several bidding groups have dropped out as a result. One of the drop-outs was the group led by Rick Caruso and Joe Torre, considered one of the frontrunners. The parking lot attendant has truly come full circle.
  • The Kings arena deal looks complex. And yes, it does look like the Maloofs will be borrowing to put up their share. The term sheet is due for public release on Thursday.
  • The City of Miami approved funding for rubber wheel trolleys that will run between downtown and the Marlins Ballpark in Little Havana.
  • San Francisco’s America’s Cup will be missing one major venue going forward: Piers 30 & 32. The piers were supposed to be used as a large staging area for teams. Costs may have proved prohibitive. The race will continue as planned, but there will be huge distances between the venues.
  • MLB and the MLBPA are finalizing details of the revised playoff system that will include a fifth team in each league and a wildcard playoff game.

Radio ratings were released last week. The winter results show a sort of stabilization. As baseball season begins, KNBR-680’s ratings should rise. Will The Game’s? As the Warriors end their season early, KNBR-1050 should take a hit.

Arbitron ratings for the last three months

If you’re wondering, former A’s station KTRB finally showed up in the ratings book last month. The rating? 0.0 in the SF market.

02.27.12
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Sacramento, Kings, & NBA announce new arena deal framework

On Saturday I took a drive up to Sacramento. I went to Raley Field and took in part of Sacramento State Hornets baseball game. While I was up in the capitol I dropped by the train station, which is immediately south of the Railyards, the site of the proposed arena entertainment and sports complex. 240 acres of dirt and old buildings will make way for an arena, a new intermodal transit facility to go with the historic rail depot, and future ancillary and related development.

Looking east across Tower Bridge towards downtown Sacramento. The Railyards is off-picture to the left.

So I guess I was fortunate to get a glimpse of things before today’s announcement by the City of Sacramento, NBA, and the Kings about a Railyards arena deal (City press release). The $387 million arena plan has been in the works for the last year, with a complete term sheet to be put up before the City Council by March 6. Details have been coming out in the last week as negotiations between the City, team, league, future arena operator AEG, and Sacramento County have caused the numbers to shift considerably as all parties rushed towards the league’s deadline (originally March 1).

When I wrote about the project two weeks ago, I opined that as usual, the devil would be in those details. Now it appears that the deal is on fairly solid footing because of the Maloofs and AEG providing more money to bridge known funding gaps. Those raised contributions, when taken in conjunction with the selling off of parking rights throughout downtown, should provide enough money to get the plan off the ground. The tenets of the deal are these:

  • $190-200 million from selling future parking revenues to private operators. To make this work, the City will have to guarantee some $9-10 million per year in revenue, which means the City may have to make up a shortfall if revenues don’t come in as expected. Sacramento County has apparently pledged revenue from three lots it owns for the effort. Existing debt the Maloofs owe to the City would be refinanced. The “cash” the Maloofs are pledging may actually come some kind of loan, though the loan wouldn’t come from the league.
  • $75 million upfront from the Maloofs, plus $75 million from future rent payments and perhaps a revenue sharing deal. Part of the upfront contribution would be $25 million in land in Natomas near ARCO/Power Balance.
  • An unknown amount from AEG. Initially this was speculated to be $50 million, but the fact that AEG will probably split gate and concession money with the Kings makes this more difficult to assess. There was also talk that AEG’s contribution would actually be part of the Kings “cash” share, but I’ve seen nothing to confirm this. AEG’s updated contribution is expected to be $60 million.
  • A 3-5% ticket surcharge being assessed by the City will not be used to pay off the arena. Instead it will go straight to the City’s general fund in order to offset the lost parking revenue. (Back of the napkin math has this at $3-5 million in revenue annually.)
  • ICON/Taylor, the developer planning the arena, is pledging to handle cost overruns.

From what I know of the area, I have to believe that for the project to get through the CEQA process at least one additional exit/interchange on I-5 between J Street and Richards Blvd. will be necessary. 7th St to the east of the Railyards is merely two lanes wide, so it’ll probably have to be widened to handle traffic not just for the arena but also for the other area development. Remember the Cal Expo plan floated in 2010? There were tons of traffic concerns associated with it, with no clear way to deal with it. Fortunately the Railyards arena will be very close to light rail and Amtrak service.

Now that the plan has been hammered out, it’s all process from here on out. The project EIR started in October, which means a draft should come out of it in the next six months. The tricky part of sequencing everything is that if the parties are all still aiming for opening in May 2015, they’ll have to certify the EIR in only 15 months in order to start building in January 2013. If the project goes to a public vote, there’s little chance that vote can happen before the EIR certification. It would seem more prudent to aim for a October 2015 opening to coincide with the start of the NBA season.

Will this get the job done? It’s a lot better looking plan than any I’ve seen for the Kings in the past decade. That’s a major improvement over the sense of impending doom that shadowed the team last April. It’s clear that this is the final shot for Sacramento to get something done for the Kings, and it’s a decent shot at this early juncture. The losers at this point are Seattle and Anaheim, both of whom were looking to poach the team. If there’s a winner, it’s David Stern, who has somehow come off looking magnanimous while not loaning or otherwise spending any league money to get the ball rolling. A year can make a lot of difference, though Kings fans should be cautiously optimistic. The Railyards arena plan is fragile at best, and while Mayor Kevin Johnson characterized today’s news as hitting the front end of a one-and-one (free throws), plenty of players and cities have bricked that second free throw.