Anaheim proposes 75 million to lure Kings
- Thread starter JB_kings
- Start date
It mentions that the 75 million is going to be repaid privately through Samueli or I think what they mean is the arena management company owned by him. I would love to read the lease and see what the fine print is on the bond payback terms. Smart businessman can put in a protection clause that only makes payments required if certain arena revenue conditions are met. As of yet they have missed percentage numbers that were supposed to go back to the city on the last deal. If Samueli is ok with paying back 75 million, why not give it to them directly instead of using bonds obtained by the city? As we all know the Kings loan had some interesting terms.
With the bonds, Samueli can pay it back over time. Likely with revenue generated from the Kings as a tenant down the line. So basically its just from the money earned from having a new tenant. It looks a lot better because Samueli is covering it so the taxpayers won't be hit with taxes. The city officials don't lose any votes and Samueli gets a new tenant for the arena that he manages.
Oh boy, light reading for me...
http://www.anaheim.net/docs_agend/q.../AS34627/AS34628/AI34634/DO34647/DO_34647.pdf
If it's accurate, then this isn't good for Sacramento. The bonds have a private investor identified, Samueli? It doesn't matter because the city is off the hook if revenues fall short.
There is little chance this not pass vote IMO.
http://www.anaheim.net/docs_agend/q.../AS34627/AS34628/AI34634/DO34647/DO_34647.pdf
If it's accurate, then this isn't good for Sacramento. The bonds have a private investor identified, Samueli? It doesn't matter because the city is off the hook if revenues fall short.
There is little chance this not pass vote IMO.
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Pretty much what I thought it would be.
According to the document:
"The principal and interest payments on the Bonds will come from the revenues of the Honda Center, which is managed by AAM. It is estimated that the additional revenues associated with the second professional sports team will be sufficient to pay the principal and interest on these new Bonds."
According to the document:
"The principal and interest payments on the Bonds will come from the revenues of the Honda Center, which is managed by AAM. It is estimated that the additional revenues associated with the second professional sports team will be sufficient to pay the principal and interest on these new Bonds."
Yea, agreed. Samueli not only is the guy they appointed to manage the city owned arena, but he is also the largest taxpayer in the OC. Not Anaheim specifically, but in Irvine. His company generates around $7 billion in revenue annually. Lets just say he has a lot of say in the OC area. If he is going to back the loan himself, there is no reason for the residents to have any problems with it.
What's new here? Haven't we always assumed that the Maloofs are being lured to an Anaheim deal with moneys? So this is some of the money. Is it enough? Is it a new development? Is it more or less than the Maloofs want? Does anyone know how this news effects things for the Maloofs? Does it change where we, Kings fans, were yesterday? Need more observations from our cadre.
Interesting. I wonder what the interest rate is on the bonds. I would think Samueli would not be able to purchase the bonds as a conflict of interest since he is basically the one guaranting them via his management company.
The bonds are 10 years so I would think that is the lease length.
Also to note the city is still taking some risk. If the bonds are defaulted on it's the citys credit that takes the hit which could make future bond issues more difficult.
The bonds are 10 years so I would think that is the lease length.
Also to note the city is still taking some risk. If the bonds are defaulted on it's the citys credit that takes the hit which could make future bond issues more difficult.
yes, but what is the market rate since the city isnt backing them. It would have to be a much higher rate since the investors are taking the risk.
Just to give you an idea of the difference.
10 year bond for $75 mil at 2% interest rate is a monthly payment of about $1.65 million. At 3% the payment is $2.31 million per month, at 4% the payment is $3.02 million a month.
So adding in the addition risk increases the month payment quite a bit.
Just to give you an idea of the difference.
10 year bond for $75 mil at 2% interest rate is a monthly payment of about $1.65 million. At 3% the payment is $2.31 million per month, at 4% the payment is $3.02 million a month.
So adding in the addition risk increases the month payment quite a bit.
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The city of Sacramento could have sold bonds, too. Bonds are always almost always purchased by private investors. I've held a share in some bonds, myself. Municipal bonds are nice, because they are tax exempt income.
t doesn't take a public vote, just a vote of the city council. But the taxpayers didn't like the idea of having to guarantee repayment, in the event of a default. Even though that is almost unheard of.
The Maloofs did not want a loan from Samueli direct to them, becasue he wanted to secure the loan with a percentage of interest in ownership of the team. Maloofs would risk losing majority ownership.
t doesn't take a public vote, just a vote of the city council. But the taxpayers didn't like the idea of having to guarantee repayment, in the event of a default. Even though that is almost unheard of.
The Maloofs did not want a loan from Samueli direct to them, becasue he wanted to secure the loan with a percentage of interest in ownership of the team. Maloofs would risk losing majority ownership.
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The city can't sell municipal bonds without guaranteeing the repayment. As to private investors, its always a risk to invest money in anything. Bonds usually have a lower interest rate, because its presumed to be lower risk than private bonds. Investors are usually fine with the slightly lower interst, because its all tax-free.
Unless I'm mis-reading something and this is a private corporation selliing the bonds.
Unless I'm mis-reading something and this is a private corporation selliing the bonds.
Right. I guess I'm making that assumption because they are unhappy with the move. Wouldn't want to facilitate it by selling their stock to the guy who wants to loan money to the Maloofs to get them to move. But if they do move, I'm pretty sure Samueli eventually winds up with a considerable stake in the Kings. Minority, non-controlling, but that's the obvious eventuality.
