Category Archives: Basketball

03.21.13
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Sacramento reels in another whale from Silicon Valley

The City of Sacramento was supposed to release its arena term sheet today. Hourly delays turned into postponement as City Manager John Shirey explained that the document was still being hammered out. Release has been rescheduled to Friday, and now we have a good reason for the delay: Warriors minority partner/VP and tech industry veteran Vivek Ranadive is now onboard as part of the Mastrov-Burkle group. The news is even bigger than that, since Ranadive will take over Mastrov’s role as leader of the group. If the Ranadive-Mastrov-Burkle group is approved by the NBA, Ranadive would take the CEO role and be a Governor at league meetings and votes.

My immediate reaction to the Ranadive news was that it’s good that the Sacramento group has more financial ballast to take on the Seattle bid. Ranadive is not a billionaire, but his status as a current minority owner and a guy who is in with David Stern and Wizards owner Ted Leonsis can be nothing but good for the bid. On the other hand, this is a major piece of 11th hour upheaval that fundamentally changes how the bid works. Ranadive bargained hard to become the controlling partner, and it’s likely that when Stern visited the W’s two weeks ago, the commish pushed Mastrov to relinquish that stake. That’s a huge role to give up if that’s been your goal for several years, if not longer. Maybe in the end it’ll help Stern streamline ownership approval if Seattle is denied. Regardless, it looks like some serious desperation on Sacramento’s part.

Ranadive’s emergence as potentially the first Indian-born owner of an American major pro sports franchise would be a major win for the NBA. It was Ranadive who introduced the W’s Bollywood night themed games, and I’d expect some serious South Asian outreach the same way the NBA has aggressively courted China and East Asia. Moreover, Ranadive continues a trend of the NBA bringing in tech-based owners. Consider the current list of owners with tech backgrounds:

  • Paul Allen, Microsoft (Blazers, purchased in 1988) 
  • Mark Cuban, Broadcast.com/Yahoo (Mavericks, 2000)
  • Dan Gilbert, Quicken/Quicken Loans (Cavaliers, 2005)
  • Ted Leonsis, AOL (Wizards, 2010)
  • Joe Lacob, Kleiner Perkins (Warriors, 2010)
  • Robert Pera, Ubiquiti (Grizzlies, 2012)

That’s more than the other three leagues combined and signifies what the NBA thinks of the nouveau riche tech world: they like it. The NFL and MLB have the least turnover, with plenty of multi-generational old money mixes with real estate tycoons and media companies. Now we’re seeing a proliferation of hedge funds and tech money infiltrating the ranks. Oil money has made major inroads into the Premier League. The economy has changed thanks to the internet and globalization. It’s good to see team ownership reflect that. For the most part, the days of the singular owner are over. The money’s bigger, as is the risk, so it makes more sense to team up to build an ownership group that can provide both the fun and the returns investors are looking for.

03.14.13
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Sonics arena shows off some innovation

The Hansen-Ballmer group has developed a habit of releasing little bits of information every couple of days to stoke Sonics fans fires. A bit of arena info here, talk of season tickets there, a progress report down the road. It’s an effective way to keep those who are interested engaged, and should serve the ownership group well as they hit the home stretch in their effort to move the Kings.

Exterior shot with turbine-shaped cone representing arena footprint

On Wednesday several renderings of the SoDo arena were released. Previously, the public was treated to a planning document from 360 Architecture and some exterior renderings, but little was known about the interior of the building. Wednesday’s release borrows a few elements from baseball and football and integrates them into an arena concept, adding some new wrinkles along the way. I like what I’ve seen so far, and would love to see if these unique elements actually enhance the experience as arena backers think it will.

View from center court towards basket and end seats

View from center court towards basket and end seats

The lower portion of the above image doesn’t look much different from any other arena. Chris Hansen wants a hockey team to be roommates with the Sonics, so the arena has a longer multipurpose footprint to accommodate an ice rink. Above the upper deck seats are shallow rings of additional seats and standing areas, much like the mezzanine and upper decks in the end zones at Cowboys Stadium. It gives the appearance of an old theater layout with multiple balconies, and bears a passing resemblance to old McArthur Court at the University of Oregon. The idea is to better utilize the vertical space by replacing a dozen rows of nosebleed seats with overhanging mini-decks. Arena designers also claim that an additional 2,000 people can be brought in above the regular seated capacity via standing room admission for the ends. Before its replacement by the larger and plusher Phil Knight-funded Matthew Knight Arena on campus, Mac Court was well known as one of the loudiest, rowdiest, most intimate gyms in the nation. What this concept is trying to do might not succeed due to scaling, but there’s a better chance of making noise when more of the building’s volume is filled with people as opposed to just air.

Lower suites are 10 rows from floor and are not closed from each other

This next view shows some lounge-type areas behind the lower suites, which are a scant 10 rows up from the court. They remind me a lot of the patio suites at the Earthquakes’ stadium, which fit a gap between the exclusivity of suites and the openness of a club lounge. Since 360 is working on both projects, it’s not surprising to see concepts from one move into the other. I’d expect the same sort of borrowing for the final vision for Cisco Field.

View from “Sonic Ring”

There appear to be around 40 suites of differing sizes, along with two club levels along each sideline. The downside to this approach is that if a fan wants a sideline seat in the lower level, he has no choice but to buy a club seat of some sort. The corners and ends don’t have premium clubs, though it’s being hinted that the Sonic Rings may have their own special amenities. I can see that working extremely well for hockey.

Comparison of seating bowl cross-sections for Seattle arena and Staples Center

Another big claim is that the seating bowl will be steeper, which should improve sightlines for both hoops and hockey. To achieve this there’s only a single suite level between the “lower” and “upper” decks (the lower suite level doesn’t count because it doesn’t wrap completely around the arena). That allows for a greater rise for each row of seats. At the traditional upper deck, the steepness is similar to other arenas. Of course, those upper deck seats in other arenas don’t have three balconies above then. It’s a novel, albeit expensive, approach that from a cost standpoint is like building a fourth deck. Whether it’ll create the desired effect is unknown at this point. I’d love to take in a game when the place opens to see if it does.

Seating at the Fukuoka Dome

The whole package is a refreshing take on the boring, old oval arena. There’s a little Soldier Field in the way the Sonic Rings overhang each other, a little Cowboys Stadium and Qwest Field, and some Amway Center (Orlando) to boot. We haven’t seen interior renderings of the Warriors’ SF arena, but I hope they incorporate some of these ideas. It could be great for fans while allowing the W’s to boost revenues. During the early pool play of the World Baseball Classic, some games were played at the Fukuoka Dome. That venue has a novel seating arrangement with a single seating deck and three levels of suites above the seats. While there’s little else to love about the place, I kept thinking throughout watching games that the approach is something that could work in MLB in some modernization. The Fukuoka Dome seats 38,000, making it an ideal size. With some tweaking it could work for a new MLB ballpark.

03.08.13
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Stern goes Mutombo on Mastrov bid, rules out expansion in Bay Area

NBA commissioner David Stern made a trip out to Oakland to talk up the Warriors as a “model franchise” and the team’s trip next fall to China, where they’ll play preseason games against the Lakers. Stern’s event had another large contingent of media from Sacramento, who wanted to hear Stern’s take on last week’s bid to save the Kings by Mark Mastrov and company. NBA Commissioner David Stern says Sacramento bid is “not quite there” financially compared to Seattle. He’s hopeful it will be eventually. To ensure that Sacramento lines up its (final?) bid properly, the NBA will hold a meeting on April 3 so that everyone has their ducks in a row in advance of the Board of Governors meetings on April 12-13.

That, folks, marks the end of the short period of Stern as bystanding non-arbiter. In case anyone thought that this was about anything other than getting the biggest, best bid possible for the sale of the Kings, it isn’t. The owners want to see their franchise values grow. If the McCourt disaster did it for baseball franchises, the Maloof debacle could certainly do it for hoops. Earlier this week a rumor was floated that the Hansen-Ballmer group might have to pay a $75 million relocation fee, instead of an amount closer to the $30 million Clay Bennett paid to move the Sonics to Oklahoma City. The owners want their piece, and David Stern’s last major effort as the commissioner will be to facilitate that. The man has played the whole thing perfectly. Now, the NBA and the bidders have kept the details close to their respective vests, so we can’t say for certain how low the bid was or how much it needs to be raised. I know this much: Mastrov put in a $420 million bid for the Warriors nearly three years ago. Stern and the owners know that Mastrov can raise capital, whether they’re bidding for 100% or 65% of the Kings. Fortunately for the Sacramento bid, there’s a few weeks left to raise the bid. Now it’s a lot like competing bids for a house in a seller’s market. The best offer with the most cash wins. You know what they say on the court: Come strong or don’t come at all.

Stern was also asked about the chances of a second Bay Area team coming via expansion if the Kings left, and he swatted that notion away. Stern left it to the Board of Governors (owners) and his successor to wrestle with that concept.

“I don’t think that we’re in for expansion of the league, any time soon. That’s just the way it is. … There are no territorial rights barriers. The only barrier is a vote by the NBA’s Board of Governors, but they’re being convened to consider the application to sell the Kings and to move the Kings.”

There’s no incentive to entertain talk of expansion as long as this bidding war – and it is indeed a bidding war – is on. Maybe after April the NBA and the losing city/bidder can talk about a framework to get an expansion or future relocated team. Chances are that even then, that losing city/bidder will be left to lick their wounds, and if it’s Sacramento/Mastrov, after having being on the losing end twice (last year for Sac when the Maloofs reneged, Mastrov in 2010 with the W’s), everyone may want to take some time to determine how much effort they want to put into this yet again. There’s just as much emotion that goes into these efforts as there is money.

I’ve thought that the horse race mentality that some of the Seattle and Sacramento partisans recently have taken on was silly, but this news  certainly makes the proceedings feel like a horse race. One of these cities will have a lot of broken hearts in early April.

03.08.13
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Big fish, small pond (and vice-versa)

USA Today NBA writer Sam Amick has a 2-for-1 today in the form of a solid interview with USC Sports Business Institute’s David Carter prefaced by a recap of the ongoing Seattle-vs.-Sacramento drama. Carter tries to get to the heart of the issue facing NBA owners next month: Is it better to be the 5th team in a larger market (SEA) or the only team in a smaller market (SAC)? Carter doesn’t take sides, instead choosing to lay out the cases for both. He also expanded the discussion to include the implications of trying to build something in California, where public funding for stadia is difficult to attain. The end of the interview has a response that encapsulates the issues in Sacramento and throughout the state so well that I had to quote it here. (Questions come from Amick, answers from Carter)

Q: I’ve been hearing a few things about the public subsidy coming into play with Sacramento’s offer, potentially around $255 million that they would put into the arena, and the idea that the NBA has concern about walking away from that type of public contribution – especially in California – where it’s so tough to get public contributions. If they walk away from it, they lose a blueprint they’d like to use moving forward. Does that pass your smell test?

A: “That’s a great observation. We’ve seen that with not just teams, but teams and venues throughout the state – from San Diego to obviously now Sacramento. The Bay Area is a good example, and LA has been at the center of it. These leagues want to be able to extract public subsidies, and if they don’t do that then it gives other cities the opportunity to point the finger and say, ‘Well they didn’t kick in tax dollars over there, why should we here?

“If it’s a quality, free-standing business that’s going to be competitive in the marketplace, then it should be able to survive on its own. That would be one side of the argument. The other side of the argument, from these owners – and it’s a good one – is that there are a lot of people who are enjoying our product and not paying directly for it. You have a sense of pride in your city, even if you don’t attend a game or you don’t watch too many of them on television. Someone needs to pay for that externality, for that benefit that the community is getting for having this company in town. You could argue that that subsidy is supposed to cover that benefit people are getting from having the team there. Maybe it’s more of theoretical bump than anything else, but it’s fair to say, ‘What’s Green Bay without the Packers?’ That’s truly a sports company town.

“Maybe if it’s an amenity, or if it’s a resource that a lot of people want and can identify with, then maybe people should be paying for someone living vicariously through their product but not paying for it.”

Take that into your weekend. I’m going to refrain from commenting on it for now, as I’d like to see what responses are elicited first.

03.01.13
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The old point guard comes through

In 12 seasons as a point guard in the NBA, Kevin Johnson averaged 9.1 assists per game. Even though he’s 13 years removed from his last game in a Phoenix Suns uniform, KJ has shown throughout this drive to keep the Kings that he can still run the point and dish out dimes like he was 26, not 46. KJ deserves credit for putting together the coalition of civic and business leaders, outside big money private equity investors (whales), and his owners of other teams that he has been lobbying to Sacramento’s cause.

That’s not to say that KJ has complete control of the situation. He still faces a formidable bid from a Seattle group that has already done the paperwork necessary to buy the team from the Maloof family. All KJ can do as mayor is to put together the best possible presentation and the most credible group to represent Sacramento. Everything else falls to the NBA and David Stern to decide.

During Thursday’s State of the City address, KJ finally revealed the names of the equity partners, along with other details important to the Sacramento bid. Let’s dispense with that information quickly:

  • Mark Mastrov will head the group attempting to buy the club.
  • Ron Burkle will head the group looking to build a new downtown arena.
  • The site being considered is Downtown Plaza, where a mall is currently located.
  • The city and the NBA still expects the arena to be a public-private partnership.
  • The previously divulged 20 local business leaders looking to invest $1 million apiece for a share of the team are all going in on the 7% minority share currently tied up in bankruptcy court.
  • Former Kings great Mitch Richmond is one of the group of 20.
  • The bid will also attempt to bring back the Sacramento Monarchs WNBA franchise, which folded in 2009 as the Maloof family started to go into the red.
  • The city intends to get its $75 million loan paid in full, and redevelop the Natomas area (where Sleep Train Pavilion is located) as part of a long range plan.
  • The city will put together a deal that involves no new taxes and has no negative impact on the general fund.

While the presence of Mastrov and Burkle were the worst-kept secret of the whole affair, the structure of their relationship to the deal is a surprise. The thought going in was that they might go in together on the team and arena. Instead, by splitting the tasks, it allows the two alpha dogs to bring in their own people for the part they’re most interested in. Mastrov could revive the group that he put together to bid on the Warriors for $420 million in 2010. The fact that Mastrov’s group made it to the final round of bidding should show to the owners and Stern that they can be comfortable with Mastrov. In addition, if Mastrov is bidding on 50-65% of the team as Hansen-Ballmer were doing, the group’s outlay should be less than what they offered for the W’s, along the lines of $300 million is my guess. Mastrov had this to say about his bid:

“This is about building a winning franchise for a winning community. Sacramento has proven time and time again to be a great NBA market. As a longtime resident of Northern California with deep ties to Sacramento, I am thrilled to be a part of an effort to do something special for the region.”

Burkle gets to bring in his friends at AEG to work on the arena project. This would be synergistic with a rumored bid for AEG by Burkle. The AEG sale is still up in the air as offers are not coming close to the $8 billion that Phil Anschutz is seeking. As of today, those monitoring the AEG horserace have real estate investment giant Colony Capital in the lead. The structure also allows one degree of separation between Burkle and the Maloofs, who aren’t exactly buddies after Burkle helped block the Maloofs’ attempt to move the Kings to Anaheim a year ago. Burkle had his own quote about the news:

“I am excited about the economic possibilities for the arena and for downtown Sacramento as a whole. We have an opportunity to transform downtown into a vibrant hub of economic and cultural activity that will create jobs and generate a positive economic impact for years to come.”

Downtown Plaza has languished for some time, and calls for a serious revamping regardless of whether or not there’s an arena. Interestingly, one of the tenants is a 24 Hour Fitness center that only opened in 2011 (update: reopened after closing). It’s one of thirteen in the Sacramento region and the only one anywhere near downtown. I would imagine that even with an arena, the 24 Hour Fitness location would be preserved at Mastrov’s behest, perhaps even expanded to include a new Kings practice facility. It also seems likely that Macy’s would stay put, at least the main (women’s) store on one of the six blocks that make up Downtown Plaza. One complicating factor is that there are 3,700 parking spaces underneath the mall. While those spaces would be extremely helpful for arena infrastructure, the NBA apparently doesn’t want parking directly underneath an arena, so those spaces will have to go. That could create a big sticking point when EIR time rolls around, since something will be needed to backfill the lost capacity. Knowing a little about the layout, the plan that would make the most sense would be to demolish the center of the mall, build the arena there, then continue to use the 24 Hour Fitness, multiplex, Macy’s, and food court, while buying additional property on the fringes to build parking garages and additional commercial space.

Will all of this be enough? Based on history, the odds remain stacked against Sacramento. At least the city and KJ are putting the best deal possible in front of the NBA. KJ even sounded highly magnanimous in his address, as he took time to thank the Maloofs for their contributions to the region over the years. He didn’t have to do that as the Maloofs are already one foot out the door. But he did, and it showed the kind of diplomacy and class one would expect of a prominent leader. In his time in the Association, KJ learned a thing or two about working the refs. It works. That’s a stark contrast from Wednesday’s SotC speech by Oakland Mayor Jean Quan, which contained yet another minor snipe at Lew Wolff (she described her meeting with Wolff as “a tough day” in line with the more difficult moments of Occupy movement). One of the frequent refrains I hear from the Oakland-only crowd is, “You can lead a horse to water but you can’t make him drink.” That’s fair. How about another popular adage, “You catch more flies with honey than with vinegar.” You want to rise above? How about rising above the fray? Food for thought, Oakland.

Update 2:30 PM – Sacramento reporter and occasional River Cats fill-in play-by-play man Rob McAllister reports that AEG is not involved with Burkle on the arena side. 

02.28.13
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Playing the FUD game

Earlier today, a report from an Orlando sports talk show cast doubt on the Seattle Hansen-Ballmer bid, because according to the report, the $30 million nonrefundable deposit was never paid by the February 1 deadline. The “news” created a minor kerfuffle as fans and media in Seattle and Sacramento tried to make sense of it.

A few hours later, outgoing Kings co-owner Joe Maloof chimed in with his first statement to the media in months: The $30 million deposit was, in fact, paid.

The Orlando talk show host, David Baumann, hasn’t updated his story or tweeted any kind of response to this clarification. By the end of business Wednesday, the focus was on Sacramento Mayor Kevin Johnson’s State of the City speech on Thursday, during which he is expected to reveal names from the local ownership group (a.k.a “whales”).

Wednesday’s histrionics were a classic example of FUD (Fear, Uncertainty, Doubt). Someone misreports something or leaks info that could prove damaging to a competitor. The same thing happened last week with Deanna Santana’s gaffe regarding Lew Wolff’s Coliseum extension letter. Misinformation grabs headlines and spreads throughout the country and industry quickly. Timed strategically in an ongoing campaign, FUD can generate enough negative attention to sink many projects and initiatives.

That brings us to Andy Dolich, who has taken on the role of Comcast Sportsnet Bay Area’s “Business Insider”. As an experienced executive in the NFL, NBA, and MLB, Dolich is well-positioned to speak authoritatively on such matters. He’s seen it all – teams thriving (80’s A’s) and floundering (49ers, Vancouver-Memphis Grizzlies), franchise moves (Grizzlies again), and new venue development (also Grizzlies). He’s extremely well-connected and is still well-networked in the Bay Area, where he maintains his office in Los Altos.

At CSN, Dolich has taken on the role of Doubting Thomas regarding two of his former employers that are seeking new homes in different cities. The Warriors are planning their San Francisco waterfront arena, going so far as to ask for state legislation to help ease some of the red tape they’ll inevitably face on the road to a new venue. The A’s continue to be stuck in Lew Wolff’s quest to move the team to San Jose, dogged by the Giants territorial rights and uncertainty regarding the team’s (and city’s) ability to take all of the necessary steps to make the move. Time and time again, Dolich trots out claims that both projects, just like the 49ers stadium, will be too expensive, too fraught with legal booby traps, too difficult to pull off. He’s probably not intentionally doing this under some unsaid agenda, but what he’s doing right now is spreading FUD. It’s FUD that provides a glimmer of hope to Oakland fans and politicians hoping to keep teams at the Coliseum. Absent any real details for Coliseum City, it’s not difficult to see why some would latch onto negative notions of competing visions as hope.

For years, Dolich has been upfront in his desire to see teams stay in their cities, whether we’re talking about the Bay Area teams or the Sacramento Kings. Strangely, while he willingly presents a case for why a move can’t happen due to various obstacles, he nearly glosses over reasons why a team could stay long-term. Sure, Cisco Field could cost $600 million or more when factoring in all of the prep work. But an Oakland ballpark won’t? Howard Terminal’s costs will be huge and could spiral out of control just like Victory Court. A ballpark at Coliseum City, even if it’s by itself with no other tenants, will have to factor in the $100 million albatross of Mt. Davis debt. That’s not FUD. That’s reality. FUD comes from a vacuum of information related to any particular situation. Dolich even makes the mistaken claim that Cisco Field would require an EIR, even though one has been certified twice by San Jose to cover different capacities and use cases. That heavy lifting is over, with only an addendum required to address the actual stadium in finished form.

Going back to the money issue, that’s where we on this site frequently bang the drum against Oakland. It’s no secret that Oakland itself is an economic weak link compared to the powerhouses in San Francisco and the South Bay. When we talk about the uphill battle Oakland faces, that can be interpreted as FUD. Even so, it’s a consensus view that has been confirmed by city staff as recently as last week. Locals know it, the national media knows it, everyone knows it. It’s incumbent upon Oakland and its supporters to change that perspective – not by talking up the city, but by taking real actions to make people believe in the city. In the end, team owners need to figure out how to pay for their privately funded facilities. To cast doubt on Oakland may seem unfair, but it’s not as if it comes from a position of naïveté. Down in San Jose, we’ve talked about the challenges for some time: redevelopment, lack of city funds for infrastructure, territorial rights, land remaining to be acquired. Daunting as those may seem, they can be overcome via procedural means and nominal investment. That’s different from Oakland, where economic concerns make investors skittish about the market. It all boils down to a simple question: If you’re going to spend $500+ million on a stadium and you can’t depend on a public subsidy, wouldn’t you want to put the stadium in a place where you can ensure you can pay it off? If MLB has concerns about Wolff hitting projections on a San Jose ballpark, what must they think about the prospects of a ballpark in Oakland?

As long as we don’t see ground broken on a ballpark for the A’s, the war of words and FUD will continue. When San Jose Arena was built, the FUD surrounding the project quickly died. Same thing for AT&T Park and now the 49ers stadium in Santa Clara. The only way to kill FUD is to prove that that it’s baseless. By working. By thriving. By building.

02.27.13
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Sacramento City Council votes to start arena negotiations

The Sacramento City Council voted 7-2 to approve ongoing discussions and negotiations to keep the Kings in the capital city. That wasn’t a surprise. What was a surprise was that another group created by minority partner John Kehriotis emerged that could put together a $750 million bid to buy the team and build an arena with City funding. For now, that bid has been relegated to Plan B, as the principals are working towards a public-private partnership on a new arena deal downtown.

For now, Kehriotis has demurred on giving details, allowing some in the media to push the presumed “whale” group to the top of the heap. There are so many variables and uncertainties in the plain that it’s impossible to tell who go-to group will be. If the “whale” group finds the project too expensive, the Kehriotis group will presumably be ready to go.

The vote authorized $150,000 to start consulting work and negotiations with the ownership group(s). The City is guided by certain negotiating principles, which were enumerated in the motion:

  • Protect the Taxpayer   No new or increased taxes will be considered for the financing of the ESC. Those who use or directly benefit from the ESC may be asked to contribute through ticket surcharges or benefit assessments.
  • Retire the Existing City Loan to the Kings   The existing City lease-revenue bond financing (loan) to the Kings must be retired. Any refinancing of the loan must be fully secured and collateralized to minimize the risk to the City.
  • New Entertainment and Sports Center Must be Located Downtown   To achieve the greatest community benefit, the new ESC must be located downtown and provide for further economic development opportunity. The City and team owners will agree on a location that best meets the interests and goals of the City and stakeholders.
  • Long-Term Commitment to Keep the Kings in Sacramento   In exchange for the City’s financial contributions there must be a secure, long-term commitment to keep the Kings in Sacramento.
  • City Will Consider Investing Net Value of its Parking, Land and Other Assets   Consistent with the 2012 financing plan and terms the City will consider investing the net value of its parking, land and other assets. Best practices for the monetization of the parking assets will be utilized to provide the greatest value to the City, its businesses and customers, with the shortest possible term while providing the greatest support for the development of the ESC. Any losses to the General Fund that result from parking monetization must be backfilled by new and reliable revenues. In consideration of the City’s financial contribution, the City will own the new ESC.
  • Public-Private Partnership   The project must be a true public-private partnership where both the City and the team share in the investment and returns of a new entertainment and sports center.
  • Natomas Arena Site Economic Reuse   The economic reuse of the existing arena site in Natomas is a critical element in defining success.

That’s a lot of moving parts. To be fair, no one expects all of this stuff to be figured out right away. The NBA will want that arena piece well scoped, since that is the main sticking point for both Sacramento and Seattle going forward. The Kehriotis bid throws a wrench in there with its right-of-first-refusal and the interest in going with a fully private arena. In last night’s discussion there was a good amount of noise regarding Kehriotis. A fully private arena may look more politically expedient than a public-private arena, even if it means building at the current Natomas/Sleep Train Arena site instead of a downtown. Even the Natomas option is problematic because of a ban on construction in the area. Mayor Kevin Johnson has been working overtime to rally the resources in preparation for the Board of Governors meeting in April. Picking a horse (ownership group) was probably not on Johnson’s list of tasks. If both bids are legitimate, it’s a good problem to have. If not, the NBA could see Seattle as the easiest path. It promises to be a crazy next six weeks in Sacramento.

02.26.13
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New Sacramento-based bidding group for Kings emerges

In what has to be considered a potential game changer, a Sacramento group wants to buy the Kings and build a privately-financed arena to keep the team in town. The kicker is that the group is headed by current Kings minority partner John Kehriotis, who owns 12.2% of the franchise. According to FOX 40 in Sacramento, the plan is to spend $750 million to buy the Kings and build an arena at either of the downtown sites or elsewhere in the region. The group claims that their plan won’t require any public money, such as the pledging of parking revenues from the 2012 arena plan.

This surprise news comes before the expected unveiling of the “whales” group which could contain Ron Burkle and/or Mark Mastrov. That’s supposed to happen towards the end of the week, when the league-imposed deadline for Sacramento to make a proposal (March 1) comes. The City-backed plan includes a public-private partnership on a downtown arena.

An unnamed source within the Kehriotis group explained that the group has $350 million in hand and a verbal commitment for the remaining $400 million. The key to the Kehriotis group’s bid is that Kehriotis, as a minority partner, has a right-of-first-refusal clause for any team sale. When this was revealed last month, it wasn’t clear that any of the minority partners would be able to put together the resources to put in a bid. If Kehriotis can pull this off, it could be the best and most politically easy way to keep the Kings in the capital. As big as $750 million, it’s well under the $1 billion Seattle and the Hansen-Ballmer group expected to put into Sonics 2.0. In addition, I’ve thought for some time that the cost estimates for a Sacramento were lowball, with the true cost of the arena approaching $500 million when completed.

The Kehriotis bid would also have to come under scrutiny first. The list of failed NBA team buyers is long and generally forgotten, and in a competitive situation, ROFR doesn’t necessarily mean the Kehriotis bid will be accepted. The group will undergo the same kind of vetting Hansen-Ballmer is getting, though Kehriotis’s status as a partner in the Kings should automatically generate some goodwill. The issue for the NBA will be the group’s ability to pull together all of its financing plan, which considering the size of the market, is extremely aggressive. It even contradicts a City staff report released Monday ahead of Tuesday’s city council meeting, which states that a fully private arena would not be “not economically viable” in Sacramento.

Unlike the NFL and MLB, there are a number of privately financed and owned arenas throughout the NBA, spanning both older venues (Madison Square Garden, The Palace of Auburn Hills, EnergySolutions Arena) to newer ones (Staples Center, Rose Garden). The Warriors plan to build their own privately financed arena with the league’s approval. If the Kehriotis group can make the numbers work, David Stern and the Board of Governors may see the arena as the path of least resistance. Both the Seattle arena plan and the main Sacramento plan involve large pledges of public money, which are subject to public review and referenda in all likelihood.

Ironically, the Kehriotis bid is sort of a double-edged sword for Sacramento, whose Mayor, Kevin Johnson, has been making the rounds and working the phones to put together a big bid of their own. With a public that is already predisposed to oppose a large public investment for an arena, citizens could easily look at Kehriotis and proclaim him the savior, rendering the “whales” bid and public arena investment unnecessary. There’s a delicate bit of negotiating at work here in that if both Sacramento groups’ ultimate goal is to keep the team in town without breaking the bank, one may have to step aside to avoid their own internal bidding war. Another possibility is the merging of groups to lighten the load, but if both have fundamentally different new arena plans and financing approaches, it may be difficult to come to a consensus. Besides, it’s a bit late to start merging plans.

Like the very hot Warriors sale situation in 2010, I would expect Stern and the BOG to simply pick the bid that works best for the league and the Maloofs. That means dollars, dollars, dollars. Stern will wake Tuesday morning to news of the Kehriotis bid, and I can’t imagine that he’ll be frowning about it.

02.20.13
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Save Oakland Sports meeting with Santana, Blackwell (Updated with Oakland apology)

Update 7:20 PM – Around 4:30 today, an article by the Trib’s Matthew Artz indicated that Oakland officials apologized to Lew Wolff for erroneously stating that the City and Mayor Jean Quan didn’t receive the letter. Wolff angrily replied (in ALL CAPS no less) that he did, in fact, send the letter, and later produced a letter of acknowledgment from Quan dated January 2. During the Bucher & Towny show on The Game, Townsend explained that his crew and Phoenix reporter Kevin Curran had launched their own inquiry into the status of this now mythical letter. Curran sent an email to the Mayor’s office asking for the letter since, by law, the City has to file all such communications. This afternoon the story from Artz broke, followed by an email reply from Quan spokesperson Sean Maher explaining the situation. Apparently the original email, which was also sent to numerous media, was buried in the “mountain of (holiday) furlough email” the City received. Because of this, news outlets reported on it first, giving City staff the impression that they didn’t receive it, when in fact, they did. The explanation was also a bit wishy-washy because the Mayor supposedly “eventually” received the letter, giving the impression that she didn’t receive it directly. Statements coming out of the Mayor’s office yesterday continued to press that they didn’t receive the letter. In any case, Oakland comes off highly incompetent at the very least and petty on top of it all, just because Santana decided to lash out at Wolff. That’s simply poor form. Obviously, that led to today’s apology.

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Monday’s much-delayed Save Oakland Sports meeting was held at La Estrellita in downtown Oakland. Though host Chris Dobbins was keen to not put City Administrators Deanna Santana and (Asst. Admin.) Fred Blackwell on the hot seat, to their credit the staffers addressed several lingering issues with some degree of frankness and a general lack of spin.

Blackwell gave an update on the state of the Coliseum City studies and EIR. The study work should be awarded in the next month, and documents should be ready by the end of the year. Because of the broad scope of the project, there will be a master plan for the 750 acres on both side of 880 and a specific plan for each side, the big focus being on the sports complex. Blackwell called Coliseum City the most dynamic project in the state in terms of size and transit access.

View from east towards Oakland Estuary. Image: JRDV

View from east towards Oakland Estuary. Image: JRDV

Based on JRDV’s newest renderings, he has a point. Much of the area on either side of the Nimitz would undergo a drastic transformation. While there would be a new football stadium in Lot B and a ballpark pushed up to the corner of Lot A, almost everything else would get torn down and replaced. Chief among the changes is a new arena, which would be placed west of 880, where Coliseum Lexus and another empty car dealership are situated. Low and mid rise buildings would be tightly packed from Oakport to the Estuary and in between the two stadia. Two new pedestrian bridges would cross 880. The BART bridge would be transformed into a huge plaza over the Union Pacific tracks. The only two legacy structures that would remain intact in the vision are the 12-story high-rise office building that briefly housed the Tribune and the newer Zhone building.

Before your eyes roll completely into the back of your head, let’s look at the three venues, starting with the ballpark. Blackwell continued previous talk of Oakland giving Lew Wolff information on Coliseum City and Howard Terminal, repeating Wolff’s continued rejection of both sites on financial grounds. Blackwell flat out said that new ownership may be required to get something done in Oakland, and that a MLB could act on behalf of a team to get a deal done. Of course, Blackwell cited Miami as an example of that working. “Working” meant taxpayers putting up 2/3 of the cost and politicians who approved the deal being run out of office. MLB wouldn’t do that unless it felt it could get several pounds of flesh. In Oakland, there is no flesh to take. The only thing MLB has offered so far is to negotiate the short-term lease at the current Coliseum.

As for the Raiders, Santana mentioned upfront that it took four months to get all of the right people (City, County, Raiders) named and set to negotiate the future stadium deal. Four months? You’d figure an e-mail thread and a conference call or two would take care of that.

In a refreshing bit of candor, Santana and Blackwell talked about the challenges facing the Raiders’ stadium piece. Santana said twice that any new project would have to bake in the $100 million of remaining debt (Mt. Davis). As I’ve mentioned before, any advantages Oakland has because of “cheap land” are wiped away because of this albatross. It also makes financing somewhat unclean, though that would depend on how current and future debt are structured. Right now, Mt. Davis debt is tied to the general fund of both City and County and was refinanced last summer. I imagine it could be complicated to restructure the debt to be paid solely by stadium/project revenues and would drive up the cost of borrowing to boot. Santana also talked about how the defeat of Measure B1 in November negatively impacted funding for Coliseum City to the tune of $40 million.

Blackwell admitted that the NFL may have a hard time giving the $200 million that Mayor Jean Quan is looking for, citing fan and corporate support. Why? The G-3 and G-4 loan programs are dependent on two specific revenue streams: national TV money and club seats. TV money is not that big a deal since it’s highly distributed, but the NFL is wary of teams running into blackouts. The Raiders are a particular high-risk case because even though the stadium doesn’t have a large capacity among NFL stadia, it’s had its share of blackouts and has a relatively low season ticket base (30,000). The recent tarping and pricing moves done by the Raiders are being done to grow the season ticket figure and reduce the chance of blackouts. In future seasons, the Raiders could increase capacity as the roll grows and the team performs better. Corporate support is another matter. Blackwell said that the NFL considers corporate support more important than regular fan support. The 49ers have done exceedingly well selling to businesses, which allowed the NFL to release $200 million for the Santa Clara stadium. Corporate support is not great in the East Bay, and the 49ers may have taken some East Bay business from the Raiders, putting the Silver and Black in a very tough position. Blackwell didn’t offer any answers on this, other than to say that the East Bay will have to step up to show it can support the Raiders in a new stadium. It’s a sobering but realistic view, not one to go rah-rah about.

On the Warriors front, Blackwell laid out the City’s case very plainly: Oakland would wait until W’s ownership got frustrated with the process of building something at Piers 30/32, then welcome the team back with open arms. With the A’s, ownership is certainly frustrated (with MLB and the Giants), not enough to run back to make a deal with Oakland. While working in SF, Blackwell saw the same strategy in place for the 49ers, only to see the team start building in the South Bay.

Things got a little strange with Santana laid into the A’s. Santana accused the A’s of playing games, claiming that the letter Wolff wrote requesting a five-year lease extension was only sent to the media, not to City or County. That’s rather confusing, because as the Merc’s John Woolfork wrote on 12/21:

If Wolff’s letter was discouraging to Oakland Mayor Jean Quan, she didn’t let on, saying in a statement that she was “pleased to receive Mr. Wolff’s letter stating his desire to stay in Oakland for five more years.”

Considering that it took four months to figure out who the players were in a negotiation, I wouldn’t be surprised if the letter was lost somewhere. One thing to keep in mind is that Wolff has already done two lease extensions at the Coliseum during his tenure. If there’s one real piece of stability here it’s Wolff, not the turnover in Oakland City Hall.

The tough part of all of this back-and-forth is that even if Oakland is resurgent as its supporters say it is, it’s not to the scale of SF and SJ. It may never be to the scale of SJ. That makes it easy to make a case against the future of pro sports in Oakland. Without some kind of miraculous public and/or private miracle to really boost Oakland, it’s hard to see how Oakland could get to its rivals’ level. Maybe the argument is that Coliseum City is that miracle. Oakland has had nearly 50 years to show that pro sports is an economic stimulator. There’s no reason to believe Coliseum City, even in its fully realized, pipe dream scenario, is the miracle Oakland is looking for. The track record – in and out of Oakland – doesn’t support it.

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More reading:

Note: Look at how different the two Tavares articles are. Editors rule!

 

02.16.13
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Future NBA All Star Games key for Warriors Arena

Taking a page from the NFL, the NBA has sought to put its own All Star Weekend in warmer climes over the last decade. After visiting the then-named Arena in Oakland in 2000, the NBA held the All Star Game in Philadelphia and Washington the subsequent two years before settling on Sun Belt cities for the last decade. This weekend’s events at Houston’s Toyota Center mark the second time in eight years that Houston’s played host. Los Angeles has already hosted twice since Staples Center opened, and New Orleans will do it twice in seven years with next year’s edition.

With NBA All Star Weekend set for the middle of the season instead of the NFL’s season climax in the Super Bowl, the timing lends itself to a more scaled down spread of activities. At 3-4 days, it’s half the length of Super Bowl week (the week after the conference championship games is something of a dead week). Predictably, it has far less projected economic impact (~$100 million) than a Super Bowl ($200-300 million), though the cost to host ASW is at least proportionally less than the Super Bowl.

Even if economic impact is distilled only into direct spending in a region of $50 million or less, it’s still an impressive figure for only a few days and brings each host city an impressive amount of international attention due the high numbers of global media usually in attendance.

As with the Super Bowl, the NBA looks for cities where the game can be hosted at a modern arena, with a number of peripheral events hosted nearby at a convention center. Also preferred is a downtown location with lots of hotels and nightspots for current and former players to host their own activities.

The exceptions of the past decade have usually been experiments. 2007 had the game in Las Vegas, which is not a city with a NBA team but has most everything else the NBA wants in terms of amenities. Unfortunately, the weekend might have been a little too hot for the NBA, making the likelihood of a repeat performance in Sin City slim. 2010’s ASW was held at Cowboys Stadium in Arlington, TX, and according to reports went much better than the weather-marred Super Bowl the following year. Mavericks owner Mark Cuban has started lobbying for the DFW area to host again, but with the game(s) held at American Airlines Center instead of Cowboys Stadium.

Other hosting years have usually followed a script.

Friday

  • Celebrity game
  • Rising Stars (rookies and sophomores) game
  • D-League skills & dunk contests [held at secondary arena]

Saturday

  • D-League All Star Game
  • Dunk, 3-point, and skills contests

Sunday

  • All Star Game

With a new arena, the Warriors and San Francisco would be well-positioned to enter a rotation of frequent ASW hosts, along with LA, Houston, New Orleans, and Phoenix. Positioned to compete with SF are Dallas and Orlando (which have hosted recently), and maybe Miami (which hasn’t) and New York (with two arenas). In conjunction with shared-hosting duties of the Super Bowl that could start in 2015, it’s an impactful combination even if each event is awarded only once a decade.

The main Saturday and Sunday events are typically held at an existing NBA arena like the ones I’ve mentioned. The secondary events are usually held at a nearby convention center. SF could try to use Moscone Center, but I’m not sure how that would work with the columns in Moscone’s North Hall and the low ceiling in the South Hall, and small footprint at Moscone West. Instead, the secondary events could be pushed to the Bill Graham Civic Auditorium.

The Bay Area has only hosted the All Star Game twice, in 1967 at the Cow Palace and the aforementioned Oakland Arena gig in 2000. Besides SF’s dependence on a new arena, Oakland would probably need an adjacent or nearby convention center to host ASW on its own, which could come in the form of a retractable domed stadium that City Hall fancies. The NBA isn’t too keen on making promises in advance of All Star Weekends the same way the NFL and MLB do with the Super Bowl and baseball’s All Star Game, so it’s not something to bet on.

And let’s not forget that Sacramento also wants to host an All Star Game if it gets a downtown arena. With a convention center near either the Railyards or Downtown Plaza sites, Sacramento would be well-positioned for a bid, if not the most desirable of locales.