Arena update from SlamOnline(sorta)

[cfechter]

I guess I'm not explaining well or not understanding what you're asking. I'm not sure if the Saca deal was supposed to be a straight donation or not (possibly- see Sheraton blurb below). Usually a city would not donate without some kind of requirements. Whether it is donated or a loan, the city would not be buying the fixtures. The developer would buy the fixtures with money provided by the city. If it's a straight over donation, then no, the city would have no financial interest in the property and no no claim to any repayment, if the developer sold. I would hope the city would at least file a UCC-1 for a few years. They could realease their interest later, when they felt they'd gotten what they wanted for their contribution (e.g. some amount of hotel tax revenues and property taxes). I honestly don't know exactly what financial terms for the money were proposed.

By the way, here are some links discussing hotel financing in downtown Sacto (Sheraton and others):


Hotels are just one example of city assistance to business/developers. They just happen to have been fairly high profile.

Thanks for the clarifications, it's unfair to ask you to explain the terms of the deals. I think there is always some sort of quid pro quo element to subsidizing these projects on some level. if it isn't in direct services provided, then it's in anticipated revenues the city would derive from having said business there (not that I agree with the government funding these projects - I swear if I ever hear one of those corporations complaining about taxes or regulation, I would shove the fact that they accepted millions of dollars of direct gifts or government assistance into their faces and tell them that they asked for it, albeit indirectly).

I'm not even sure I agree with the argument that sales and/or other tax revenue would increase either (along with the job creation argument - beyond the amoutn of work that constructing a hotel would generate) - if individuals were spending money at a newly constructed Hyatt, wouldn't that just be taking money away from another location in the city, that would be getting the revenues otherwise? The only additional tax revenue the city would get would probably be from out of towners that would have come here otherwise.

Am I wrong?

 

[kupman]

Don't get me wrong. I think Sacramento is at BIG risk of losing the Kings. Sooner than later, the Kings will have no place to play once Arco is deemed unsafe due to a falling roof.

I do not think that Vegas will be the first option. I think that back to K.C. will be the first option. They already have a new arena and would loooove to have a new tenant. Second option would probably be Anaheim. Vegas, perhaps, would be the third option.

The problem with Vegas is the image problem. We all love the NBA here, but the league is not popular right now among the general population. Ratings are clearly down. The image problem is not confined to the current gambling scandal. The image problem also contains a "thug" factor. Just look at all the negative press that occurred over the All Star break in Vegas - whether it was right or not, the image sticks. I just think that beyond our concerns, a move to Vegas would be a really bad marketing move for the NBA.

As a side question that I have always wondered about - why doesn't Pittsburgh, Cincinnati or even Tampa/ St. Pete ever come-up as viable NBA cities? I know that Tampa is close to Orlando, but no more so that Sacramento to Oakland.

 

[Warhawk]

Thanks for the clarifications, it's unfair to ask you to explain the terms of the deals. I think there is always some sort of quid pro quo element to subsidizing these projects on some level. if it isn't in direct services provided, then it's in anticipated revenues the city would derive from having said business there (not that I agree with the government funding these projects - I swear if I ever hear one of those corporations complaining about taxes or regulation, I would shove the fact that they accepted millions of dollars of direct gifts or government assistance into their faces and tell them that they asked for it, albeit indirectly).

I'm not even sure I agree with the argument that sales and/or other tax revenue would increase either (along with the job creation argument - beyond the amoutn of work that constructing a hotel would generate) - if individuals were spending money at a newly constructed Hyatt, wouldn't that just be taking money away from another location in the city, that would be getting the revenues otherwise? The only additional tax revenue the city would get would probably be from out of towners that would have come here otherwise.

Am I wrong?

To a certain degree.

Yes, some hotel room rentals would cannibalize others.

Some might not and would generate new business. Some folks only stay at certain locations and would stay out of town otherwise.

The NBA said one reason it couldn't hold events like All-Star games in Sac is because there was not enough capacity. Subsidies to unique places (arenas, theme parks, retailers without a lot of stores in the area, etc) generate new business. Those sales, more than likely, would have gone elsewhere.

 

[kennadog]

I'm not even sure I agree with the argument that sales and/or other tax revenue would increase either (along with the job creation argument - beyond the amoutn of work that constructing a hotel would generate) - if individuals were spending money at a newly constructed Hyatt, wouldn't that just be taking money away from another location in the city, that would be getting the revenues otherwise? The only additional tax revenue the city would get would probably be from out of towners that would have come here otherwise.

Am I wrong?

Edit: Should have read Warhawk's post first.

Supposedly the convention center lost money for quite a few years and Sacramento can't get events like the NBA All-Star game, because there were/are? not enough full-service hotels (rooms). I suspect there is a good argument in there.

The idea being that with higher end hotel rooms closer to event sites will attract more conventions or certain types of events. This means attracting out-of-towners (conventioneers) who are not coming here now, because Sacramento can't attract those events.

Seems to me Sacramento will have to be a cheaper alternative, tho, to compete with places like Tahoe, Monterey or San Franciso, etc., for conventions in particular.

 

[6th]

cfechter and kennadog,
Thank you! I have particularly enjoyed reading your posts. And, I have found them very enlightening.

 

[cfechter]

Edit: Should have read Warhawk's post first.

Supposedly the convention center lost money for quite a few years and Sacramento can't get events like the NBA All-Star game, because there were/are? not enough full-service hotels (rooms). I suspect there is a good argument in there.

The idea being that with higher end hotel rooms closer to event sites will attract more conventions or certain types of events. This means attracting out-of-towners (conventioneers) who are not coming here now, because Sacramento can't attract those events.

Seems to me Sacramento will have to be a cheaper alternative, tho, to compete with places like Tahoe, Monterey or San Franciso, etc., for conventions in particular.

i agree - Sacramento would have to be a cheaper alternative than one of the marquee places for obvious reasons - who'd want to come to a convention here when they could go to Tahoe or Vegas for the same price?

Part of my point is, sure having the Kings in town generates additional revenues, but if I spend 20 bucks on a ticket (generating $1.50 of sales tax revenues for the city), wouldn't I just spend those $1.50 on other items?

This is a complicated issue, no matter how you cut it.

Thanks for the compliment 6th, but Kennadog is the smart one in the conversation

 

[kennadog]

i agree - Sacramento would have to be a cheaper alternative than one of the marquee places for obvious reasons - who'd want to come to a convention here when they could go to Tahoe or Vegas for the same price?

Part of my point is, sure having the Kings in town generates additional revenues, but if I spend 20 bucks on a ticket (generating $1.50 of sales tax revenues for the city), wouldn't I just spend those $1.50 on other items?

This is a complicated issue, no matter how you cut it.

Thanks for the compliment 6th, but Kennadog is the smart one in the conversation

You are being much too modest. And you're welcome, 6th.

As to where people spend their money. Yes, some of that money will go to other entertainment. You have to remember, tho, many Kings fans come from outside Sacramento. They may spend that money (and pay taxes) closer to home. That's almost for sure likely for me, here in Yuba City. Kings/Monarchs is a big extra expense in my budget. Other things I do in Sacramento aren't likely to increase, or certainly not to the same level. I can only speak for myself, tho.

Also, if I did want to go the the circus or a pro sport event with my future grandchild, I'll have to go to the Bay Area. B&B no longer comes to Sac. So I'll spend my entertainment dollars down there. So any taxes or fees or surcharges I spend will be there, instead of Sacramento. (Oy, tickets, gas, horrid drive, parking, maybe food and a hotel. Ugh.) Weeknight events will be pretty much out of the question for me. If I spend my money on big ticket entertaiment there, I may help pay for some other city's arena, stadium or concert venue.

 

[cfechter]

You are being much too modest. And you're welcome, 6th.

As to where people spend their money. Yes, some of that money will go to other entertainment. You have to remember, tho, many Kings fans come from outside Sacramento. They may spend that money (and pay taxes) closer to home. That's almost for sure likely for me, here in Yuba City. Kings/Monarchs is a big extra expense in my budget. Other things I do in Sacramento aren't likely to increase, or certainly not to the same level. I can only speak for myself, tho.

Also, if I did want to go the the circus or a pro sport event with my future grandchild, I'll have to go to the Bay Area. B&B no longer comes to Sac. So I'll spend my entertainment dollars down there. So any taxes or fees or surcharges I spend will be there, instead of Sacramento. (Oy, tickets, gas, horrid drive, parking, maybe food and a hotel. Ugh.) Weeknight events will be pretty much out of the question for me. If I spend my money on big ticket entertaiment there, I may help pay for some other city's arena, stadium or concert venue.

Point well taken - I went to the circus last year with my kids, along with I think every disney on ice event.

I think the only way I could really put forth an informed opinion is to see some sort of economic study put forth by someone who really analyzed the economics in depth. I would also have to study deals made in other cities for other arenas to really give any proposed deal a strong thumbs up (or thumbs down).

 

[kennadog]

Point well taken - I went to the circus last year with my kids, along with I think every disney on ice event.

I think the only way I could really put forth an informed opinion is to see some sort of economic study put forth by someone who really analyzed the economics in depth. I would also have to study deals made in other cities for other arenas to really give any proposed deal a strong thumbs up (or thumbs down).

The problem is there's studies on both sides (pro-con) and it appears, as usual on what statistics you use and how you interpret them. One of the factors that seems to bode well for an arena is whether of not it is part of an overall development plan for an area and not just done in a vacuum. (Gee...planning ahead does help? ) And of course, it would have to be dependent upon what the details of each financing scenario would be.

Most studies seem to indicate that it's not a good use of public funds. On the other hand, I've seen some studies that have tried to quantify the intangibles of such projects in monetary terms. Things like civic pride and enjoyment. A very tough thing to do, since it can be subjective, but after all, the intangible things in life are often very important.

Public money gets spent on public art that you can enjoy for free, just by walking around. The Lincoln Memorial in DC doesn't produce revenue, but I think most people would say it wasn't wasted public money.

Certainly a beautifully designed building provides an esthetic value compared to ugly buildings (Ala the cheap, but hideous 50s era government buildings on the capital mall in Sacramento. )

Then how do you account for anecdotal reports. By all accounts the area around the Suns arena was bighted before the arena was buillt and now it's vibrant and construction is booming. (Probably one of those arenas where overall planning for an area helped.)

Sacramento just has quite a few negatives financially for a pro-sports team. Hopefully whatever the league proposes will be a palatable solution.

 

[cfechter]

The problem is there's studies on both sides (pro-con) and it appears, as usual on what statistics you use and how you interpret them. One of the factors that seems to bode well for an arena is whether of not it is part of an overall development plan for an area and not just done in a vacuum. (Gee...planning ahead does help? ) And of course, it would have to be dependent upon what the details of each financing scenario would be.

Most studies seem to indicate that it's not a good use of public funds. On the other hand, I've seen some studies that have tried to quantify the intangibles of such projects in monetary terms. Things like civic pride and enjoyment. A very tough thing to do, since it can be subjective, but after all, the intangible things in life are often very important.

Public money gets spent on public art that you can enjoy for free, just by walking around. The Lincoln Memorial in DC doesn't produce revenue, but I think most people would say it wasn't wasted public money.

Certainly a beautifully designed building provides an esthetic value compared to ugly buildings (Ala the cheap, but hideous 50s era government buildings on the capital mall in Sacramento. )

Then how do you account for anecdotal reports. By all accounts the area around the Suns arena was bighted before the arena was buillt and now it's vibrant and construction is booming. (Probably one of those arenas where overall planning for an area helped.)

Sacramento just has quite a few negatives financially for a pro-sports team. Hopefully whatever the league proposes will be a palatable solution.

I used to work at 400 capitol mall, and yes, those buildings down there are absolutely disgusting.

I can't see the league proposing anything that doesn't require a massive investment on the part of the city, and I just can't see the city investing hundreds of millions of dollars in an arena. It's almost an impossible situation, to say the least.

This conversation at minimum has forced me to think deeper about the topic, which I appreciate. If I had more time I think I'd look into other recent arena deals and figure out the financing arrangements for each.

Sacramento just doesn't have the huge corporate presence in town to bolster sponsorships & high dollar luxury boxes (I'm guessing here because I haven't compared the cost of Sacramento luxury boxes to the cost of boxes elsewhere). I can't see the Mid-west being anything of an option because I think those cities have the same problems we have.

But I digress....one thing I don't like about having the public finance the arena is I think there will be less incentive to be efficient in the construction process.

At this point I'm rambling just anything random thought that comes into my head!!! ONce I start making more sense I'll try to post something coherent.

 

[VF21]

I have to jump in and second 6th's comments. I'm really enjoying the cfechter/kennadog exchange. This is the type of information the Bee should put forth instead of the endless prattle they foisted on the Sacramento public the last time around.

Nice job, folks.

 

[cfechter]

I have to jump in and second 6th's comments. I'm really enjoying the cfechter/kennadog exchange. This is the type of information the Bee should put forth instead of the endless prattle they foisted on the Sacramento public the last time around.

Nice job, folks.

I would have to agree with you VF - I thought RE Graswich gave a particularly ignorant analysis in one of the columns he wrote about funding an arena.

Marcos Breton actually wrote something good about it though, which surprised me.

 

[kennadog]

I have to jump in and second 6th's comments. I'm really enjoying the cfechter/kennadog exchange. This is the type of information the Bee should put forth instead of the endless prattle they foisted on the Sacramento public the last time around.

Nice job, folks.

Thanks VF. It's been an interesting conversation for me. There are good arguments on both sides of the issue. There really isn't going to be a simple answer. I just know I'd miss an arena in Sac, with (perferably) or without the Kings.

 

[Circa_1985_Fan]

I do not think that Vegas will be the first option. I think that back to K.C. will be the first option. They already have a new arena and would loooove to have a new tenant. Second option would probably be Anaheim. Vegas, perhaps, would be the third option.

Vegas would be the 4th or 5th option, IMO...behind K.C., then San Diego, then Anaheim(not sure Stern really wants to put a THIRD team in one metro area, though)...I can almost guaran-damn-tee that Vegas wont be the home of the Kings anytime in this lifetime...not unless the Maloofs sell the team...which I dont see happening any time in the NEAR future, which is what Vegas is banking on as far as landing a team...they want the NEAR future.

 

[Circa_1985_Fan]

Thanks VF. It's been an interesting conversation for me. There are good arguments on both sides of the issue. There really isn't going to be a simple answer. I just know I'd miss an arena in Sac, with (perferably) or without the Kings.

Wouldnt we all Kenna...wouldnt we all...