Maloofs Carls Jr Commercial
- Thread starter slugking50
- Start date
It's like me telling my less fortunate friends and family that I'm worth $300,000, and then asking to them to chip in to buy a $175,000 yacht, and rent it to me.
Except in this case we are talking about asking businessmen to sell off their other profitable businesses to come up with the cash to build an arena for a break even or losing business in MSE. Businessmen that already have used profits from those other businesses to cover the red ink of MSE. Now you want them to sell off the businesses that make it even possible for them to operate MSE.
If not sell off, then mortgage other business interests to the hilt to come up with the cash. No lender would lend money on profitable businesses to finance a business that can't pay its own way. No good businessman would do that either.
If it could be done, by some miracle, you risk turning the profitable businesses into losing businesses. Then every thing falls apart.
I do think the NBA needs to consider how it can help the franchises in small to mid-markets that struggle to survive financially and still be competitive, but it doesn't look like that's going to happen any time soon.
Yeah, I'm sure that's it. The Maloofs made a Carl's Jr. commercial as part of some huge plot to use subterfuge and deceit to sneak out of town.
Good grief.
Good grief.
I am 110% sure they did not create this commercial to sabotage. Especially since this was most likely created before Q&R were even drawn up.
My point was the timing was very suspect, nothing more nothing less. They could of easily pushed the commercial back 3 weeks. In the BEE they were even asked about delaying it(I think it was CJR's that asked if they wanted to delay it) and the Maloofs said (not word for word sorry couldn't find the article again) that they thought Sacto residents would find it funny.
And to be honest I thought the commercial was hilarious. Just bad timing.
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Kennadog, they wouldn't sell off other parts of their business to pay for the arena. They'd pay for it in exactly the same way they're paying for the Palms and the Palms expansion: They'd borrow the money. The Maloofs did not pay cash to build the Palms.
The problem is that the Maloofs recognize that an arena in Sacramento will never be as profitable as a casino in Las Vegas; they only way it pencils out is to have someone else pay for the bulk of it. Since there's very darned little public will to pay for it, and no corporate presence to pay for it (that's what happens when you live in the country's 38th largest city; we're looking at a natural consequence here), they have to rely on parking revenues (except it looks like they want public funding AND 100% of parking revenues, 100% of the time) AND a huge public input.
People here have taken it very personally when I point this out, and frankly, it makes no sense. All I'm doing is pointing out that there are no corporations around here willing to fund this privately, and there is very little taxpayer will to pay for this, and the City will never agree to 8,000 parking spots, so we have a deadlock situation.
As far as the Kings attracting Fortune 1,000 companies, I think over 20 years of Kings in Sacramento has proven one thing: That is absolutely untrue. How many Fortune 1,000 companies have come here because of the Kings? Zero. How many Fortune 1,000 companies have come here at all? Still zero. How many have left, but it had not a thing to do with the Kings? Well, one actually. I don't blame their departure on the Kings, though.
I think that's just the problem we face, living in the country's 38th largest City; one that hosts MAYBE a single Fortune 1,000 company, McClatchy (and even that's a shrinking industry). The patient is the NBA, and it's sick. There are quite a few larger markets that have both the taxpayer will AND the corporate presence to make it work (Las Vegas has FIVE companies in the Fortune 1,000; did you know that? Orange County has more than that, even).
It's really nothing personal with me. I've always just tried to analyze things. I think, as successful business people, the Maloofs recognize that they have a strong FAN base here, but a very, very weak FINANCIAL base here.
I really, honestly think that if the Maloofs decided to move to Anaheim, Vegas or KC, it would make one heck of a lot of business sense. If you were on the outside looking in, you'd have to agree. A casual observer from Denver would have to say, "Hmmm, that makes sense."
Anyway, after reading about their meetings from yesterday, in which everyone met and agreed that they're still miles apart on parking, arena size and the sphere of influence and claiming they've made progress, I now think the Maloofs MAY come out and threaten to move before the election, to scare up votes. It's something they haven't tried yet; the scare tactic. I personally think it's much too late to play that card -- they should have played it BEFORE the absentee ballots went out -- but they haven't tried it yet. It's looking to me like that's the last card.
I go back to a prediction I made a looooong time ago: Look for the Maloofs to announce a final decision when they're hosting the All Star game this February. That's looking more and more likely to me.
By the way, I don't think the surcharge approach will work this time around, if there's a Plan B. I say that because the surcharge will be far too high. I'd guess that for 200 events a year, they'd be very happy if they sold a total of 3 million tickets. That'd work out to an average surcharge of roughly $5 for each and every event. That'd price out too many events.
The problem is that the Maloofs recognize that an arena in Sacramento will never be as profitable as a casino in Las Vegas; they only way it pencils out is to have someone else pay for the bulk of it. Since there's very darned little public will to pay for it, and no corporate presence to pay for it (that's what happens when you live in the country's 38th largest city; we're looking at a natural consequence here), they have to rely on parking revenues (except it looks like they want public funding AND 100% of parking revenues, 100% of the time) AND a huge public input.
People here have taken it very personally when I point this out, and frankly, it makes no sense. All I'm doing is pointing out that there are no corporations around here willing to fund this privately, and there is very little taxpayer will to pay for this, and the City will never agree to 8,000 parking spots, so we have a deadlock situation.
As far as the Kings attracting Fortune 1,000 companies, I think over 20 years of Kings in Sacramento has proven one thing: That is absolutely untrue. How many Fortune 1,000 companies have come here because of the Kings? Zero. How many Fortune 1,000 companies have come here at all? Still zero. How many have left, but it had not a thing to do with the Kings? Well, one actually. I don't blame their departure on the Kings, though.
I think that's just the problem we face, living in the country's 38th largest City; one that hosts MAYBE a single Fortune 1,000 company, McClatchy (and even that's a shrinking industry). The patient is the NBA, and it's sick. There are quite a few larger markets that have both the taxpayer will AND the corporate presence to make it work (Las Vegas has FIVE companies in the Fortune 1,000; did you know that? Orange County has more than that, even).
It's really nothing personal with me. I've always just tried to analyze things. I think, as successful business people, the Maloofs recognize that they have a strong FAN base here, but a very, very weak FINANCIAL base here.
I really, honestly think that if the Maloofs decided to move to Anaheim, Vegas or KC, it would make one heck of a lot of business sense. If you were on the outside looking in, you'd have to agree. A casual observer from Denver would have to say, "Hmmm, that makes sense."
Anyway, after reading about their meetings from yesterday, in which everyone met and agreed that they're still miles apart on parking, arena size and the sphere of influence and claiming they've made progress, I now think the Maloofs MAY come out and threaten to move before the election, to scare up votes. It's something they haven't tried yet; the scare tactic. I personally think it's much too late to play that card -- they should have played it BEFORE the absentee ballots went out -- but they haven't tried it yet. It's looking to me like that's the last card.
I go back to a prediction I made a looooong time ago: Look for the Maloofs to announce a final decision when they're hosting the All Star game this February. That's looking more and more likely to me.
By the way, I don't think the surcharge approach will work this time around, if there's a Plan B. I say that because the surcharge will be far too high. I'd guess that for 200 events a year, they'd be very happy if they sold a total of 3 million tickets. That'd work out to an average surcharge of roughly $5 for each and every event. That'd price out too many events.
It's not a matter of being stupid. It's a matter of not understanding the way people in Sacramento look at things. The Maloofs are insulated, surrounded by people who tell them what they want to hear. That's why they get up and storm out of meetings - some of the things they should have expected totally blindside them because their own people IMHO haven't told them.
It's like the whole stupid gold standard fiasco. They signed off on it because they simply didn't have a clue.
I do think some people may have tried to tell the Maloofs the timing on this commercial was horrific but, like the emperor and his new clothes, they (the Maloofs) only heard what they wanted to hear. The small voice screaming out the truth just wasn't heard.
It's like the whole stupid gold standard fiasco. They signed off on it because they simply didn't have a clue.
I do think some people may have tried to tell the Maloofs the timing on this commercial was horrific but, like the emperor and his new clothes, they (the Maloofs) only heard what they wanted to hear. The small voice screaming out the truth just wasn't heard.
Just a couple of thoughts because, quite frankly, I don't have the energy to respond in detail to each point.
You cannot compare owning a casino in Las Vegas to owning an NBA franchise in Sacramento. Well, you can but it makes no sense whatsoever. NBA owners don't expect to make a profit; that's not why they own the teams. What they want is to hopefully break even on their way to winning an NBA title.
I think it's interesting that you took what you wanted from yesterday's news to shore up your argument. What I heard was the city/county and the Maloofs are still willing to sit down and talk.
The idea the Maloofs will cut and run if these ballot measures fail is totally without substance. What do they have to do to try and convince people they want to do everything they can to stay here? Quite frankly, it's people who are in such a hurry to predict their departure that are making it such a problem for them to NOT consider it.
Between R.E. Graswich and his smear campaign AND the people who have talked up Las Vegas to the point where the uninformed consider it a viable option, the Kings AND their fans are being sold down the river. I, for one, am just a little tired of it.
If you accuse someone of something long enough and no matter how hard they try they cannot convince you they're not doing it, there eventually comes the point in time when they figure maybe further resistance is futile.
You cannot compare owning a casino in Las Vegas to owning an NBA franchise in Sacramento. Well, you can but it makes no sense whatsoever. NBA owners don't expect to make a profit; that's not why they own the teams. What they want is to hopefully break even on their way to winning an NBA title.
I think it's interesting that you took what you wanted from yesterday's news to shore up your argument. What I heard was the city/county and the Maloofs are still willing to sit down and talk.
The idea the Maloofs will cut and run if these ballot measures fail is totally without substance. What do they have to do to try and convince people they want to do everything they can to stay here? Quite frankly, it's people who are in such a hurry to predict their departure that are making it such a problem for them to NOT consider it.
Between R.E. Graswich and his smear campaign AND the people who have talked up Las Vegas to the point where the uninformed consider it a viable option, the Kings AND their fans are being sold down the river. I, for one, am just a little tired of it.
If you accuse someone of something long enough and no matter how hard they try they cannot convince you they're not doing it, there eventually comes the point in time when they figure maybe further resistance is futile.
I know this is a side issue to the main point but you keep saying this. The fact is: the Sacramento area including th media market is the 18th largest in the nation. This is the important number, the size of the city of Sacramento is not really relevant.
Moreover, the city of Elk Grove was just listed as the fastest growing city in the nation. So, while corporate representation may be low population and media market share is growing at a VERY fast rate.
Moreover, the city of Elk Grove was just listed as the fastest growing city in the nation. So, while corporate representation may be low population and media market share is growing at a VERY fast rate.
I hear you AS and I appreciate your thoughts on the matter. At times I wish you would provide more constructive ideas on how a deal could get done rather than blowing holes in the current deal. But you are right, your assessment of the situation has been fair and accurate.
This is point that has been made in the past that I would like to comment upon:
I really, honestly think that if the Maloofs decided to move to Anaheim, Vegas or KC, it would make one heck of a lot of business sense. If you were on the outside looking in, you'd have to agree. A casual observer from Denver would have to say, "Hmmm, that makes sense
It does, perhaps, make good business sense. However, owning a professional sports franchise is not first and foremost about making money. I think that the Maloofs purchased the team because they love b-ball. If they primarily wanted to make money they probably would have purchased a different type of franchise. Joe has said himself that "fortunes are not made in professional sports, fortunes are lost."
Sacramento is a good place for the Maloofs because we arguably have the best fans in the NBA and that may difficult to duplicate anywhere else. Also, it is not like the Kings financial situation is in dire straits. They lose money about 1/2 the time and the make money about 1/2 the time. Could they do better somewhere else financially? Probably. Would they be having as much fun? Questionable.
I am guessing that this is a dialog that has occurred within the Maloof family more than 1x. Arco clearly needs to be replaced. However, I doubt that the Maloofs will make their decision solely on what makes the best financial sense. I do not think that it is that simple for them.
This is point that has been made in the past that I would like to comment upon:
I really, honestly think that if the Maloofs decided to move to Anaheim, Vegas or KC, it would make one heck of a lot of business sense. If you were on the outside looking in, you'd have to agree. A casual observer from Denver would have to say, "Hmmm, that makes sense
It does, perhaps, make good business sense. However, owning a professional sports franchise is not first and foremost about making money. I think that the Maloofs purchased the team because they love b-ball. If they primarily wanted to make money they probably would have purchased a different type of franchise. Joe has said himself that "fortunes are not made in professional sports, fortunes are lost."
Sacramento is a good place for the Maloofs because we arguably have the best fans in the NBA and that may difficult to duplicate anywhere else. Also, it is not like the Kings financial situation is in dire straits. They lose money about 1/2 the time and the make money about 1/2 the time. Could they do better somewhere else financially? Probably. Would they be having as much fun? Questionable.
I am guessing that this is a dialog that has occurred within the Maloof family more than 1x. Arco clearly needs to be replaced. However, I doubt that the Maloofs will make their decision solely on what makes the best financial sense. I do not think that it is that simple for them.
Sports franchise owners DO make money. The money they make comes from the appreciation of the franchise itself. These things are like 401Ks on steroids.
I put money into a retirement account, and at this point, it is an expense. I put money into it, and get nothing out of it. That's how owning a sports franchise works. So the Maloofs paid $150 million for the franchise AND the arena 10 years ago, and now the estimated value of the franchise is about $350 million. I know they have had to put $10 million a year into it, so they're into this about $250 million now. And they have an asset that is now worth $350 million.
I like that rate of return.
One a year-to-year basis, what the Maloofs say is true: You lose money. But asset appreciation makes up for that, and how.
As for Sacramento being the 38th largest City but in the 18th largest media market, that only makes sense if the plan to fund the arena actually gets money from the rest of those people, somehow or another. As drawn up, the proposed sales tax does not collect funds from Placer, El Dorado or Yolo Counties. It'd be nice if they could figure out a way to do that, but my guess is that all of those counties would decline to participate. So really, you cannot count all those other people, because you're not getting any money from them. Only a couple thousand Placer County residents will go to a Kings game, out of a population of well over 200,000. If you proposed raising sales taxes to the residents of Placer, it'd fail by an even larger amount than Q&R are failing now.
So we're stuck with what we have in Sacramento County, and I don't think it's a pretty picture. No taxpayer desire to do this; no corporate presence to do this. The Maloofs tried to do something fairly creative with parking, but the City will not pay to build a parking lot that size when one of the consequences of that will be to bankrupt their current parking facilities.
In this city, I just don't see how major league sports is viable. We can't change the corporate climate in this town, and the team itself is not located in the most prosperous county in the area (that'd be Placer). I did sort of think that maybe the Kings should move to Roseville. But, of course, that'd cut off El Dorado, Yolo and Solano, and even parts of Sacramento. Stockton NBA fans would just look west at that point.
This is a very, very challenging situation. So far, the taxpayers are not buying into this.
I put money into a retirement account, and at this point, it is an expense. I put money into it, and get nothing out of it. That's how owning a sports franchise works. So the Maloofs paid $150 million for the franchise AND the arena 10 years ago, and now the estimated value of the franchise is about $350 million. I know they have had to put $10 million a year into it, so they're into this about $250 million now. And they have an asset that is now worth $350 million.
I like that rate of return.
One a year-to-year basis, what the Maloofs say is true: You lose money. But asset appreciation makes up for that, and how.
As for Sacramento being the 38th largest City but in the 18th largest media market, that only makes sense if the plan to fund the arena actually gets money from the rest of those people, somehow or another. As drawn up, the proposed sales tax does not collect funds from Placer, El Dorado or Yolo Counties. It'd be nice if they could figure out a way to do that, but my guess is that all of those counties would decline to participate. So really, you cannot count all those other people, because you're not getting any money from them. Only a couple thousand Placer County residents will go to a Kings game, out of a population of well over 200,000. If you proposed raising sales taxes to the residents of Placer, it'd fail by an even larger amount than Q&R are failing now.
So we're stuck with what we have in Sacramento County, and I don't think it's a pretty picture. No taxpayer desire to do this; no corporate presence to do this. The Maloofs tried to do something fairly creative with parking, but the City will not pay to build a parking lot that size when one of the consequences of that will be to bankrupt their current parking facilities.
In this city, I just don't see how major league sports is viable. We can't change the corporate climate in this town, and the team itself is not located in the most prosperous county in the area (that'd be Placer). I did sort of think that maybe the Kings should move to Roseville. But, of course, that'd cut off El Dorado, Yolo and Solano, and even parts of Sacramento. Stockton NBA fans would just look west at that point.
This is a very, very challenging situation. So far, the taxpayers are not buying into this.
The only time franchise owners make money is if/when they SELL the franchise. The appreciated value of the asset is mere illusion until it's made tangible by a sale. It's like the value of homes during the recent real estate boom. Houses that were valued at $150,000 suddenly spiked to $350,000 or more. Did that make their owners any money? Nope. Not unless they sold the home. And then they'd have to pay capital gains tax after the allowance for the purchase of a new home on the one-time residence replacement provision.
Major league sports isn't viable? Oh, give me a bleeping break. The Kings have sold out for years. The franchise is viable; the only fly in the ointment right now is the arena. The Maloofs inherited an arena that was built 20 years ON THE CHEAP. That's the problem.
You cannot ask other counties to participate. By California law, that would require a statewide ballot measure.
I honestly think you want this whole thing to fail. You're awfully quick to point out all the down sides, real and perceived, but I haven't seen you have even one thing positive to say.
I think your user name speaks volumes.
Major league sports isn't viable? Oh, give me a bleeping break. The Kings have sold out for years. The franchise is viable; the only fly in the ointment right now is the arena. The Maloofs inherited an arena that was built 20 years ON THE CHEAP. That's the problem.
You cannot ask other counties to participate. By California law, that would require a statewide ballot measure.
I honestly think you want this whole thing to fail. You're awfully quick to point out all the down sides, real and perceived, but I haven't seen you have even one thing positive to say.
I think your user name speaks volumes.
I've said that numerous times. I'm a lender/underwriter, though mostly housing, including apartments.
They could borrow money to build the plans and the addition, because they could present to the bank a good business proposal and the bank would see that even a conservative estimate of the cash flow would be a pretty safe bet for them as a lender. They have plenty of other similar ventures in the same market to compare a proposed plan and financing structure to. Not to mention the Maloofs will pay off a good chunk of the construction financing from the sale of the condos.
I did not say franchise owners don't make any money. I was talking about the poor cash flow situation, which is what affects the financing possibilites. The value of the franchise cannot pay for a new arena. Even if they could borrow against the equity in the franchise, any lender is going to see that you have no way to make the monthly payments, because the cash flow is way, way too low.
Will the Maloofs make money on the Kings franchise? If they sell, most definitely, even after subtracting out the years in the red and luxury tax payments they have made or may make. So what? They can't sell the franchise to realize the profit to build a new arena for a team they just sold.
Yes, there is a fundamental financial problem in the NBA. This is currently probably true for the majority of the franchises.
Just this AM, they were talking about the fact that Anaheim/Orange County has a market of about 7 million separate from the LA market. That dwarfs Sacramento.
And I'd add that there are far more numbers of very wealthy individuals there and more corporate presence. The issue there is the Maloofs wouldn't own/control the arena. But its possible they could still make better money there, even without that control.
That's why I say people have to quit saying the Maloofs are coercing or blackmailing the city. I believe they want to stay very much. However, I don't expect them to stay if it just isn't financially viable for them. That's not blackmail, that's just good business sense.
The Maloofs may seem clueless about some things, but they are clearly great business people. Absolutely nothing wrong with that.
They could borrow money to build the plans and the addition, because they could present to the bank a good business proposal and the bank would see that even a conservative estimate of the cash flow would be a pretty safe bet for them as a lender. They have plenty of other similar ventures in the same market to compare a proposed plan and financing structure to. Not to mention the Maloofs will pay off a good chunk of the construction financing from the sale of the condos.
I did not say franchise owners don't make any money. I was talking about the poor cash flow situation, which is what affects the financing possibilites. The value of the franchise cannot pay for a new arena. Even if they could borrow against the equity in the franchise, any lender is going to see that you have no way to make the monthly payments, because the cash flow is way, way too low.
Will the Maloofs make money on the Kings franchise? If they sell, most definitely, even after subtracting out the years in the red and luxury tax payments they have made or may make. So what? They can't sell the franchise to realize the profit to build a new arena for a team they just sold.
Yes, there is a fundamental financial problem in the NBA. This is currently probably true for the majority of the franchises.
Just this AM, they were talking about the fact that Anaheim/Orange County has a market of about 7 million separate from the LA market. That dwarfs Sacramento.
And I'd add that there are far more numbers of very wealthy individuals there and more corporate presence. The issue there is the Maloofs wouldn't own/control the arena. But its possible they could still make better money there, even without that control.
That's why I say people have to quit saying the Maloofs are coercing or blackmailing the city. I believe they want to stay very much. However, I don't expect them to stay if it just isn't financially viable for them. That's not blackmail, that's just good business sense.
The Maloofs may seem clueless about some things, but they are clearly great business people. Absolutely nothing wrong with that.
Arena skeptic - I agree with most of what you're saying, but a couple of points:
* Major league sports is viable in Sacramento by your own calculations. That's not the question. The question is whether the Maloofs will take more money and/or a better arena deal in another city.
* There will be absolutely no announcement that the Kings are going to move, epseically not in mid-season. If (when?) the Maloofs decide to move the team, they'll never be able to show their faces in Sacramento again. A midseason move announcement would very likely cause the fans to turn on not just the Maloofs, but on the whole franchise. It would be ugly and the Maloofs don't like to feel like bad guys, so they won't do it.
I personally don't have a lot of optimism because I don't see what alternatives are left. Public financing is out. Maybe some combination of land deals, hotel, rental car, parking, and ticket surcharges - but I just don't see how all that is going to work.
* Major league sports is viable in Sacramento by your own calculations. That's not the question. The question is whether the Maloofs will take more money and/or a better arena deal in another city.
* There will be absolutely no announcement that the Kings are going to move, epseically not in mid-season. If (when?) the Maloofs decide to move the team, they'll never be able to show their faces in Sacramento again. A midseason move announcement would very likely cause the fans to turn on not just the Maloofs, but on the whole franchise. It would be ugly and the Maloofs don't like to feel like bad guys, so they won't do it.
I personally don't have a lot of optimism because I don't see what alternatives are left. Public financing is out. Maybe some combination of land deals, hotel, rental car, parking, and ticket surcharges - but I just don't see how all that is going to work.
Remember, the first proposal for Houston went down in flames, too. It was afterwards the team and the city stepped back, regrouped and came up with a workable plan.
If this comes around again, I expect to see much better organization, including starting from the ground up (so to speak) and not trying to backfill the foundation after you're half-way through.
If this comes around again, I expect to see much better organization, including starting from the ground up (so to speak) and not trying to backfill the foundation after you're half-way through.
I really hope this is the case if we get another chance. Perhaps the most discouraging thing about this deal was there was zero creativity in getting the deal done.
The new arena has been an item of interest for at least six years and the best they could come up with was a sales tax increase. I mean, c'mon, that is an idea that comes to into head after thinking about it for 30 seconds. I guess nobody could come-up with a more creative and palatable idea in 6 years. That is disappointing.
The new arena has been an item of interest for at least six years and the best they could come up with was a sales tax increase. I mean, c'mon, that is an idea that comes to into head after thinking about it for 30 seconds. I guess nobody could come-up with a more creative and palatable idea in 6 years. That is disappointing.
I really hope this is the case if we get another chance. Perhaps the most discouraging thing about this deal was there was zero creativity in getting the deal done.
The new arena has been an item of interest for at least six years and the best they could come up with was a sales tax increase. I mean, c'mon, that is an idea that comes to into head after thinking about it for 30 seconds. I guess nobody could come-up with a more creative and palatable idea in 6 years. That is disappointing.
The new arena has been an item of interest for at least six years and the best they could come up with was a sales tax increase. I mean, c'mon, that is an idea that comes to into head after thinking about it for 30 seconds. I guess nobody could come-up with a more creative and palatable idea in 6 years. That is disappointing.
But the county is who gets stuck with this GARBAGE tax. If all the surrounding counties want a new arena put it in Roseville, Folsom, or Elk Grove. But by asking the county to pay for something that the MAJORITY of people living there dont use is unreasonable. Besides whats the point of arguing when it's going to fail?
I really hope this is the case if we get another chance. Perhaps the most discouraging thing about this deal was there was zero creativity in getting the deal done.
The new arena has been an item of interest for at least six years and the best they could come up with was a sales tax increase. I mean, c'mon, that is an idea that comes to into head after thinking about it for 30 seconds. I guess nobody could come-up with a more creative and palatable idea in 6 years. That is disappointing.
The new arena has been an item of interest for at least six years and the best they could come up with was a sales tax increase. I mean, c'mon, that is an idea that comes to into head after thinking about it for 30 seconds. I guess nobody could come-up with a more creative and palatable idea in 6 years. That is disappointing.
That's the basic problem with this whole thing. It was a very desperate, last second attempt by the city/county to do something. I don't think its wasted effort, even if Q & R fail.
At least it got the parties to sit down and thrash out a great many of the issues on both sides. Both sides have a much better idea of what the other side needs/wants. And at last the city/county acted like it even matters to them if the city as a sports/entertainment venue or if the Kings leave. After years of asking the city to negotiate with them, the city and county finally did. That's huge.
What they need to do at this point is decide where it will be and figure out a better financing structure, that works for both sides.
Well, Kennadog, people keep talking about a rental car tax, a hotel tax, a sales tax and ticket surcharges as if all these items are mutually exclusive. I'd like to suggest for a moment that they're not. A $10 ticket surcharge is too much? Well, what if we make it $5, but then put on a 1/4 cent sales tax for 3 years and a 4% rental car surcharge for 5 years?
That way, the people who USE the arena end up paying a LARGER share than those who do not.
You see, I'm an old Democrat who voted no on Prop 13 (that was my first vote, at the age of 18) and also voted no on 218... But they PASSED. We need to respect the rule of law. I was on the losing side, and in this case, I have to respect the majority decision.
Now, I'm still a Democrat, but I am sorta glad we have Prop 13 and 218. I say that because we now own a house. In the mid 1970s, at the end of the year, the property tax bills would land on doorsteps in about December. Those made for some jolly Christmases; where, if the housing market went up 15% that year, and the Counties just needed more money, your property tax bill would go up by 25%. I am so glad we got that under control.
We bought our house in 1992, near the real estate market low. What we bought for $180k is now worth $450k. I don't know if we'd be able to keep that house if our property tax bill had followed those 1970s patterns (or worse). I am a convert now. I know our tax bill will be 2% higher than it was last year. It's not that great a deal when the county profits just because a bunch of people had paper gains.
I think there are creative ways to do this; far more creative than having 2 years or 4 years or 6 years, or whatever it is, and then still have negotiations going on with less than 3 weeks until election day. That's ridiculous. How can people vote yes on "Trust us"? How in the world can any reasonable person expect that?
As wicked smart as I know Rob is, in this case, he showed little imagination, or he just is a bad negotiator. Heck, maybe he's the guy who goes to the Hummer dealer and tells the salesman, "Knock $200 off that price and I'll buy that right now!". Ya never know.
That way, the people who USE the arena end up paying a LARGER share than those who do not.
You see, I'm an old Democrat who voted no on Prop 13 (that was my first vote, at the age of 18) and also voted no on 218... But they PASSED. We need to respect the rule of law. I was on the losing side, and in this case, I have to respect the majority decision.
Now, I'm still a Democrat, but I am sorta glad we have Prop 13 and 218. I say that because we now own a house. In the mid 1970s, at the end of the year, the property tax bills would land on doorsteps in about December. Those made for some jolly Christmases; where, if the housing market went up 15% that year, and the Counties just needed more money, your property tax bill would go up by 25%. I am so glad we got that under control.
We bought our house in 1992, near the real estate market low. What we bought for $180k is now worth $450k. I don't know if we'd be able to keep that house if our property tax bill had followed those 1970s patterns (or worse). I am a convert now. I know our tax bill will be 2% higher than it was last year. It's not that great a deal when the county profits just because a bunch of people had paper gains.
I think there are creative ways to do this; far more creative than having 2 years or 4 years or 6 years, or whatever it is, and then still have negotiations going on with less than 3 weeks until election day. That's ridiculous. How can people vote yes on "Trust us"? How in the world can any reasonable person expect that?
As wicked smart as I know Rob is, in this case, he showed little imagination, or he just is a bad negotiator. Heck, maybe he's the guy who goes to the Hummer dealer and tells the salesman, "Knock $200 off that price and I'll buy that right now!". Ya never know.
Ugh, I hate when I wipe out a long post by accident.
Those ideas weren't floated in this deal, at least partly because of the negative reaction to their previous mention. The county is not keen on rental car tax, because its their revenue and it is helping pay for the airport expansion and upgrading. Restaurant and bar owners were not excited about a food and beverage tax. The public was pretty negative about bond issuance.
There is currently a ticket surcharge, actually. It goes toward repayment of the current loan. And lets face it, the Maloofs realized there was a limit to how high ticket prices could go. You just can't make ticket prices much higher without losing business. I don't think it would be great to have the arena half full of people who can afford very high ticket prices. You really don't necessarily gain any more revenue.
I'm a homeowner with a lot of equity. I just moved to be closer to my new job. I'm paying a lot more in taxes for a cheaper house. Do I feel sorry for myself? No. Working in affordable housing, I feel sorry for the people nowadays who can't even afford to buy their first house, because they can't pay the property tax that's way higher than the people who already have their homes and/or can't afford the Mello-Roos, impact fess, special assessment associated with new home purchases.
Homeowners already get a humongous subsidy from the government, one of the biggest government subsidies around.....mortage interest write-offs. Meanwhile renters get little to no write-offs, can't afford to buy and are paying more rent than a lot of homeowners pay for their house payment. (Another big gov subsidy to HO....FHA-insured loans.)
Prop 218 I just think is undemocratic.
Those ideas weren't floated in this deal, at least partly because of the negative reaction to their previous mention. The county is not keen on rental car tax, because its their revenue and it is helping pay for the airport expansion and upgrading. Restaurant and bar owners were not excited about a food and beverage tax. The public was pretty negative about bond issuance.
There is currently a ticket surcharge, actually. It goes toward repayment of the current loan. And lets face it, the Maloofs realized there was a limit to how high ticket prices could go. You just can't make ticket prices much higher without losing business. I don't think it would be great to have the arena half full of people who can afford very high ticket prices. You really don't necessarily gain any more revenue.
I'm a homeowner with a lot of equity. I just moved to be closer to my new job. I'm paying a lot more in taxes for a cheaper house. Do I feel sorry for myself? No. Working in affordable housing, I feel sorry for the people nowadays who can't even afford to buy their first house, because they can't pay the property tax that's way higher than the people who already have their homes and/or can't afford the Mello-Roos, impact fess, special assessment associated with new home purchases.
Homeowners already get a humongous subsidy from the government, one of the biggest government subsidies around.....mortage interest write-offs. Meanwhile renters get little to no write-offs, can't afford to buy and are paying more rent than a lot of homeowners pay for their house payment. (Another big gov subsidy to HO....FHA-insured loans.)
Prop 218 I just think is undemocratic.
The MAIN problem thus far has been showing the NEED for a new arena. Until and unless they can convince the people of Sacramento that Arco needs to be replaced, nothing else is going to fall into place.
They need to start at the beginning and not assume the majority of people will buy into the shortcomings of Arco on just someone's say-so. PROVE there's a need and then find a way to fill it.
They need to start at the beginning and not assume the majority of people will buy into the shortcomings of Arco on just someone's say-so. PROVE there's a need and then find a way to fill it.
Interesting
This is actually one of the better posts. So as an accountant, I'd like to put in my 1/4 a cent
This post hit it on the head, especially the last sentence. The NBA has IMO a horrible business model. Player salaries are guaranteed before they're earned on the court & before the franchise generates revenue. Also since approx 30% of the league revenues are shared, smaller market teams are at a huge disadvantage in competing with its larger market brethren. With the league continuing to increase its minimum franchise requirements (i.e. arena requirements, security, % of season ticket seats) its difficult for small market teams to do business.
Bingo. 99.9% of sports team owners' primary source of income is business(es)other than the sports franchise. Any money they came up with to buy a team in the first place is due to their success in another venture.
I dont know where this person got this from, but this is the most incorrect statement of the topic. The sales price of the franchise may be greater than the purchase price, but if you factor in the profits and losses over the time of ownership, at the end of the day the owner breaks even. Most of these teams are owned for at least 20 years, so they'll be very good profit years, but also very bad loss years. And we won't even get into the taxes that have to be paid if a profit is realized from the sale
They're billionaires on paper. The $1B number is the estimated current value of all their businesses. I doubt that Joe & Gavin can go to the bank and withdraw like $500M in available cash. My ballpark figure would be approx $100-$200M, but its divided amongst six people (Collen, Joe, Gavin, George, Adrienne, Philip).
Also, you have to realize that the Palms and the Kings are owned by two different partnership groups. The Maloofs may be majority owners in both but they're definately not sole owners. The family only owns about 55% of the Kings, so the other 45% is a financial stake by another party.
This is actually one of the better posts. So as an accountant, I'd like to put in my 1/4 a cent
This post hit it on the head, especially the last sentence. The NBA has IMO a horrible business model. Player salaries are guaranteed before they're earned on the court & before the franchise generates revenue. Also since approx 30% of the league revenues are shared, smaller market teams are at a huge disadvantage in competing with its larger market brethren. With the league continuing to increase its minimum franchise requirements (i.e. arena requirements, security, % of season ticket seats) its difficult for small market teams to do business.
Bingo. 99.9% of sports team owners' primary source of income is business(es)other than the sports franchise. Any money they came up with to buy a team in the first place is due to their success in another venture.
I dont know where this person got this from, but this is the most incorrect statement of the topic. The sales price of the franchise may be greater than the purchase price, but if you factor in the profits and losses over the time of ownership, at the end of the day the owner breaks even. Most of these teams are owned for at least 20 years, so they'll be very good profit years, but also very bad loss years. And we won't even get into the taxes that have to be paid if a profit is realized from the sale
They're billionaires on paper. The $1B number is the estimated current value of all their businesses. I doubt that Joe & Gavin can go to the bank and withdraw like $500M in available cash. My ballpark figure would be approx $100-$200M, but its divided amongst six people (Collen, Joe, Gavin, George, Adrienne, Philip).
Also, you have to realize that the Palms and the Kings are owned by two different partnership groups. The Maloofs may be majority owners in both but they're definately not sole owners. The family only owns about 55% of the Kings, so the other 45% is a financial stake by another party.
That's because you didn't fully parse what I said.
The Maloofs paid $150 million for the franchise. Since then, they've been losing $10 million/year on the franchise, so they have now spent a total of $250 million. However, the franchise is now worth $350 million, according to estimates.
So they'll realize a $100 million gain if they sell the team.
Put another way, the franchises are gaining more equity than they're losing year-to-year.
But if you believe what the now-former owner of the Memphis Grizzlies says, his team lost $50 million in 2006. That's horrible, and is, unfortunately, further proof that the shifting economics of the NBA may result in many smaller teams biting the dust. It's not the cities that host these teams that has changed; it's the general climate of the NBA, where salaries are increasing far more quickly than can be supported. It's a tricky situation, and cities like Portland, Seattle, Memphis, Orlando and, yes, Sacramento (among others) are squarely in the crosshairs here.
I've suggested before that Sacramento's economic climate probably cannot support major league sports, and it's not the city's fault; it is the fault of a radically changing pro sports climate, where all of a sudden, $70 million payrolls are the norm. If team salaries are going up at 5 times the rate of inflation, that's like jumping off a 20 story building, and reporting to someone on the 10th floor that things are going fine so far.
We're at the 10th floor. Believe it.
The Maloofs paid $150 million for the franchise. Since then, they've been losing $10 million/year on the franchise, so they have now spent a total of $250 million. However, the franchise is now worth $350 million, according to estimates.
So they'll realize a $100 million gain if they sell the team.
Put another way, the franchises are gaining more equity than they're losing year-to-year.
But if you believe what the now-former owner of the Memphis Grizzlies says, his team lost $50 million in 2006. That's horrible, and is, unfortunately, further proof that the shifting economics of the NBA may result in many smaller teams biting the dust. It's not the cities that host these teams that has changed; it's the general climate of the NBA, where salaries are increasing far more quickly than can be supported. It's a tricky situation, and cities like Portland, Seattle, Memphis, Orlando and, yes, Sacramento (among others) are squarely in the crosshairs here.
I've suggested before that Sacramento's economic climate probably cannot support major league sports, and it's not the city's fault; it is the fault of a radically changing pro sports climate, where all of a sudden, $70 million payrolls are the norm. If team salaries are going up at 5 times the rate of inflation, that's like jumping off a 20 story building, and reporting to someone on the 10th floor that things are going fine so far.
We're at the 10th floor. Believe it.
Pretty amazing that owners are willing to risk some loss, huh? Becasue they aren't really in it to get rich. Its more like a hobby to them, but they can't afford to lose too much. Kind of like going to Las Vegas. Its entertaining, but don't bet the house.
Besides loses from operations, some owners, like the Maloofs have had to pay luxury tax in some years. When they have to pay, they lose out on the distribution of money from the league. Alost like losing twice. And the $100 million capital gain? Imagine the tax on that!
And if they want to buy another franchise, it will cost more, too, due to inflation.
Besides loses from operations, some owners, like the Maloofs have had to pay luxury tax in some years. When they have to pay, they lose out on the distribution of money from the league. Alost like losing twice. And the $100 million capital gain? Imagine the tax on that!
And if they want to buy another franchise, it will cost more, too, due to inflation.
Big deal. If the NBA gets to where it's at a crisis, it will just do like the NHL and close down until it sorts out it's business model. The league won't fold. It's not like there's 29 franchises and only poor old Sacramento can't make the grade. You got the usual suspects in NY and LA that swim in revenue. Then the next tier cities like Chicago that do ok. But by far the largest group has cities like Sacramento that are challenged to turn a profit every year. I'll stick with the NBA because there are worse sports business models like MLB. Maybe within the next decade there will be a multi year lockout or the next Jordan like phenom will get them through another boom. But why cry and quit? We can ride out the bad times.