Potential Anaheim Lease For Sacramento Kings Released; Centerpiece Is $50 Million Loa
- Thread starter Peter_Gibbons
- Start date
http://www.insidehoops.com/blog/?p=7010
This problem at the Palms may have a lot to do with why the Maloofs are seemingly being impulive and/or in a panic. It also may have bearing on their ability to get a loan. It also explains the threat in the contract. They won't be able to screw around with Samueli.
This problem at the Palms may have a lot to do with why the Maloofs are seemingly being impulive and/or in a panic. It also may have bearing on their ability to get a loan. It also explains the threat in the contract. They won't be able to screw around with Samueli.
That would almost have to be the case. I can't imagine them handing over a contract that big with only three weeks lest that The Maloofs weren't at least mostly familiar with. That's no guarantee they will sign it though. We can still hope they come to their senses and realize the deal ain't that great.
At the risk of doing too much apples to oranges, lets compare some potential building revenue. According to Wikipedia, the total number of people that paid to attend events at Arco last year was just short of 2 million people. But forget Arco, because in no serious scenario does that building have a chance to continue to host NBA game for much longer. But the fact is that in a down economy and a poor building, nearly 2 million fans paid to attend, park, eat, drink and buy stuff. Of that, the Maloofs got 100% of the net profits on ticket sales, parking and you name it. If there are 41 regular season games and 2 preseason game and for grins well throw in 3 playoff games, that's 46 NBA related revenue producing games. Say the OC folks just love their new Kings and they average 17,000 for all 46 games. This means that 782,000 people will be leaving their money at the Honda Center. The Kings will get zero dollars from any other event. So these 782,000 paying attendees will have to outproduce revenue that almost 2 million people generated. Suites, club seating, parking, etc. All have less dates to produce revenue.
I'm telling you who I want to be in this partnership, and that is Samueli. He is risking nothing and could gain an NBA team if the Maloofs miscalculate their revenue and miss a payment on their VCAP. Those Vegas gamblers...
I'm telling you who I want to be in this partnership, and that is Samueli. He is risking nothing and could gain an NBA team if the Maloofs miscalculate their revenue and miss a payment on their VCAP. Those Vegas gamblers...
As part of the relocation deal offered to the Maloofs I wonder if Samueli would offer a loan/perk to the Maloofs to save the Palms on the side? The Palms situation is much, much more expensive than the Kings relocation amount. I thought I read somewhere that $300 million is owed on the Palms. Ouch. Please correct me if I'm wrong. Is it even worth saving at this juncture? BTW, the Sahara is shutting down in May due to bad times. Vegas is taking a beating.
Thanks. The more we know, the more we know. Too bad we aren't the decison makers. On the other hand, maybe it would be too much of a headache. The Maloofs could end up with nothing and as somebody said, lose all their father's money. I won't go that far, but they are on the cliffedge to losing the only two big businesses they have left.
No specific language. But it clearly states that under no circumstance can a payment on the VCAP be missed unless some specific conditions that are out of the team's control. If they miss a payment, then they are exposed to an accelerated repayment. I didn't find the details of those numbers, but if you miss a payment, then it's in default. The language looks very iron clad written and I wouldn't want to defend anyone who tried to squirm out of it.
So what happens if the lockout wears on for a long time and they cant sign free agents because the move fees drianed all their reserves. Then team tanks because Tyreke's foot makes him sit out a season and Cousins punches a fan because he called him a name. You have a half empty arena because OC has like a dozen better things to do on a Tuesday night and you are losing money faster than you thought. I'm being dramatic here. But as a businessman, you have to worry about worse case scenarios and have a plan. From all appearances, the Maloofs look like they are doing this on little reserve in the tank.
So what happens if the lockout wears on for a long time and they cant sign free agents because the move fees drianed all their reserves. Then team tanks because Tyreke's foot makes him sit out a season and Cousins punches a fan because he called him a name. You have a half empty arena because OC has like a dozen better things to do on a Tuesday night and you are losing money faster than you thought. I'm being dramatic here. But as a businessman, you have to worry about worse case scenarios and have a plan. From all appearances, the Maloofs look like they are doing this on little reserve in the tank.
2 million covers? Interesting. Not bad at all considering the economy. The only thing is that the TV revenue that the Maloofs may get down here (Lakers' 'open' slot) may push the TOTAL revenues higher even with Sac's TV money included. Still, though, I would rather stay in Sacramento. There's no guarantees that the Kings/Royals will be a success. That's why I was asking in my previous post above if Samueli is offering bail-out money or somekind of help for the Palms to motivate a relocation to Anaheim.
I think what you guys are forgetting is that the Maloofs don't have to pay for any expenses for running the Honda Center. Samueli is paying for that as he is the MANAGER. Maloofs don't pay the employees (clean up, food service, ticket sales, gate, security, upkeep, etc etc) or utilities or anything. The are just using the facility in exchange for part of the revenues.
With Arco, they have to pay for all the employees, all the bills to run and maintain the place. You have to subtract the expense from their Arco revenue.
It really is a risk. There is no way to be certain that this move will make money. Not with 2 other NBA teams, MLB, NFL, MLS, and NHL all in the vicinity, as well as USC and UCLA. To make money, the Kings will have to win from the start. No one down there will throw money away on a crapy team with all the other options in the area. Plus the lockout only adds to the risk. If this team was 2 years further in its development, I wouldn't see it as a problem. They'd be winning more, generate more excitement, and maybe even take some fans away from the Clips.
But when you haven't won more then 25 games for 3 consecutive years, and you needto make money right from the start, and you're competing with all the other pro teams down there, it's definitely a risk.
But when you haven't won more then 25 games for 3 consecutive years, and you needto make money right from the start, and you're competing with all the other pro teams down there, it's definitely a risk.
The Maloofs apparently weren't satisfied with owing one city over 50 million dollars and are looking to add another massive loan to their repertoire that they must repay while simultaneously hemorrhaging money from the other facets of their "company". If they bite on this particular deal, savvy businessmen they are not.
Wrong, you are not understanding the contract again. Facility fee is an extra fee that they (Maloofs and Samueli) charges the customer on top of the tickets cost. When you buy a ticket, some arenas charge a facility fee. They have to pay each other a share of the fee they collected from the customers.
I stated clearly that the Maloofs are paying PART of their revenue to use the arena, which includes the 7.5%. Thats on the SB nation initial page for petes sake.
Samueli pays janitorial, cleaning after games, maintenance, placement of basketball court, security, ticket sales, ticket takers, lighting etc.
I stated clearly that the Maloofs are paying PART of their revenue to use the arena, which includes the 7.5%. Thats on the SB nation initial page for petes sake.
Samueli pays janitorial, cleaning after games, maintenance, placement of basketball court, security, ticket sales, ticket takers, lighting etc.
Some forbes data:
09/10 season
Revenue by team in millions
Lakers $214
Warrors $119
Kings $103
Clippers $102
La Kings $98
Sharks $88
Ducks $85
Knicks $226
NY Rangers $154
NJ Devils $104
Nets $89
NY Islanders $63
Kings don't seem to be doing to bad. I bet the number would go down at the Honda Center.
09/10 season
Revenue by team in millions
Lakers $214
Warrors $119
Kings $103
Clippers $102
La Kings $98
Sharks $88
Ducks $85
Knicks $226
NY Rangers $154
NJ Devils $104
Nets $89
NY Islanders $63
Kings don't seem to be doing to bad. I bet the number would go down at the Honda Center.
There are a lot of smart, intellegent people on this board. I really mean that. I have learned more about arena leasing reading this thread than I ever would have thought.
This whole deal in my estimation comes down to three very important factors:
1. Can the Kings ownership come up with enough capital funds to cover relocation and the outstanding loan to the City of Sacramento. Will Mayor Johnson and City Council accept Arco Arena as sufficient payment for the loan. Or will they make the Maloof Family cough up every red cent before they load up the U-Haul. How does that work.
2. Can the Kings ownership cut a good enough TV deal with Fox Sports West and KCAL-TV 9 (both now are without a team with the Lakers new mega-deal) in time enough for the what is now looking like 2012 NBA season. Or is not having a TV deal by April 18th OK with the BOG. The team can negotiate TV deal through the lockout.
3. Will the NBA BOGs have the guts to make history in allowing "three team" markets in professional sports. Because if they do this, they will open the flood gates for 3 teams in LA, 3 teams in NY/NJ, 2 teams in the Bay Area, and a possible second team in the third largest market Chicago. I could see a scenario where 10 NBA teams can be in four markets. If that happens, Sacramento will never ever get another team.
I feel that regardless of the arena situation here in Sacramento, the Kings ownership is going to take this Anaheim deal regardless of the arena risk. Because they know that if they don't take it now, Memphis and Milwaukee is next in line.
This whole deal in my estimation comes down to three very important factors:
1. Can the Kings ownership come up with enough capital funds to cover relocation and the outstanding loan to the City of Sacramento. Will Mayor Johnson and City Council accept Arco Arena as sufficient payment for the loan. Or will they make the Maloof Family cough up every red cent before they load up the U-Haul. How does that work.
2. Can the Kings ownership cut a good enough TV deal with Fox Sports West and KCAL-TV 9 (both now are without a team with the Lakers new mega-deal) in time enough for the what is now looking like 2012 NBA season. Or is not having a TV deal by April 18th OK with the BOG. The team can negotiate TV deal through the lockout.
3. Will the NBA BOGs have the guts to make history in allowing "three team" markets in professional sports. Because if they do this, they will open the flood gates for 3 teams in LA, 3 teams in NY/NJ, 2 teams in the Bay Area, and a possible second team in the third largest market Chicago. I could see a scenario where 10 NBA teams can be in four markets. If that happens, Sacramento will never ever get another team.
I feel that regardless of the arena situation here in Sacramento, the Kings ownership is going to take this Anaheim deal regardless of the arena risk. Because they know that if they don't take it now, Memphis and Milwaukee is next in line.
1. No. The money is owed to bond holders not the city. Getting the arena is only an option in case of default.
2. Open slots mean little in terms of money. Looks at who their competition is in that time slot. Lakers, Clippers, LA Kings and Ducks all play the same time. TV contracts are determined by advertising dollars. The NBA team in the Honda center will most of the time be up against one of those teams if not two for TV ratings.
3. That is the big question. NY has one available arena now on long island. The nets are moving to brooklyn which means a team could move to NJ too.
2. Open slots mean little in terms of money. Looks at who their competition is in that time slot. Lakers, Clippers, LA Kings and Ducks all play the same time. TV contracts are determined by advertising dollars. The NBA team in the Honda center will most of the time be up against one of those teams if not two for TV ratings.
3. That is the big question. NY has one available arena now on long island. The nets are moving to brooklyn which means a team could move to NJ too.
Isn't it incredibly ironic that the city of Sacramento is trying it's damnedest to scrape together funding for a 300 or 400 million dollar deal for a brand new arena and Anaheim comes in here with 75 million dollars and their own aging arena and takes the team? The 50 million dollars going to the Kings out of this is substantially less than the 70 million the team got from Sacramento 14 years ago, and the repayment terms are much much worse. If I had no stake in any of this as a fan, I would have to admit the whole situation is pretty hilarious.
They are in serious loan trouble with the Palms. They are "restructuring" but could lose the Palms or more likely, lose conrtrol of the Palms. They are a risk to the person or entity giving the loan. They will pay for this with high rates or putting something else at big risk. The money they will make is theoretical if they move and real if they stay. It might even be they can't get a big enough loan.
Their credibility as buisnessmen and playboys would be destroyed if they left Sacto holding the bag with a worthless building. I think image means a lot to the Maloofs.
TV deals are dependent on ratings to a huge extent. Ad rates are driven by viewership stats and the station needs to make more money in ads than they pay to the team. It will depend on how popular the Kings/Royals are. If I was a TV station, given the record of the team in the last 5 years and the attendance recently, I would be cautious about doling out a huge contract. By that I mean a contract that makes up for what could be a huge expense to move. They probably will not give out a good deal based on how good the team will get but how they are now. They run TV stations and aren't optimistic fans.
The stated attitude of Stern as echoed from the Sacramento Mayor's office is that the NBA is very sensitive to the reality and/or apearance that a small market has no chance. In the end the owners vote and they always vote "yes" on a move. They have never had a vote of having three teams (besides the other sports in the area vs the number of good pro sports and college sports in Sacto - none] and might take a second breathe before they rubber stamp with a "yes" vote. The Clippers and Lakers are actively lobbying the other owners to vote "no."
The ultimate answer is "I don't know."
The league, if it is telling the truth on where its interests lie, must protect small markets. Otherwise they have been full of crap all along. Yes, Milwaukee is in bad shape. They have a bad arena owned by an absentee owner, a 76 year old senior Senator named Herb Kohl.
I doubt if they can come up with the money to move despite deals from other areas. They do not cover the expenses. It might end up being a question is "can they come up with the cash to move?" So far, I don't think so.
Flying off the edge a bit, I think some people have a misconception of the rich. Rich people get rich by being good businessmen. They don't get rich by giving away money without asking for an arm and a leg in returm. The idea that the Maloofs are billionaires is the perfect example. They can't be billionaires. They have sold the business that made the family the money although I have only heard that here and don't know if it is true. They are in serious trouble at the Palms. They are in trouble here although if you assume they are really not billionaires, the small profit pretty much guareanteed in this area moving forward may look better than putting everything at risk. I think they are desparate and thinking about rolling the dice to try to come up with the cash to salvage the Palms and their image.
What is a billionaire? Is it a person who controls a billion dollars worth of property or who actually has a net worth of a billion. They are the owners of the Kings on paper yet in reality own 51%. The same may become true at the Palms or worse.
Will they risk their minority partners' money knowing that at least 25% are totally against the move? Even rich people are human and I think the Maloofs are as human as you can be. They are not good businessmen or perhaps just got killed by the economy. There is an assumption that Samueli lights his Cuban cigars with $100 bills. Is he one of the few uneffected by the economy? I doubt it.
Their credibility as buisnessmen and playboys would be destroyed if they left Sacto holding the bag with a worthless building. I think image means a lot to the Maloofs.
TV deals are dependent on ratings to a huge extent. Ad rates are driven by viewership stats and the station needs to make more money in ads than they pay to the team. It will depend on how popular the Kings/Royals are. If I was a TV station, given the record of the team in the last 5 years and the attendance recently, I would be cautious about doling out a huge contract. By that I mean a contract that makes up for what could be a huge expense to move. They probably will not give out a good deal based on how good the team will get but how they are now. They run TV stations and aren't optimistic fans.
The stated attitude of Stern as echoed from the Sacramento Mayor's office is that the NBA is very sensitive to the reality and/or apearance that a small market has no chance. In the end the owners vote and they always vote "yes" on a move. They have never had a vote of having three teams (besides the other sports in the area vs the number of good pro sports and college sports in Sacto - none] and might take a second breathe before they rubber stamp with a "yes" vote. The Clippers and Lakers are actively lobbying the other owners to vote "no."
The ultimate answer is "I don't know."
The league, if it is telling the truth on where its interests lie, must protect small markets. Otherwise they have been full of crap all along. Yes, Milwaukee is in bad shape. They have a bad arena owned by an absentee owner, a 76 year old senior Senator named Herb Kohl.
I doubt if they can come up with the money to move despite deals from other areas. They do not cover the expenses. It might end up being a question is "can they come up with the cash to move?" So far, I don't think so.
Flying off the edge a bit, I think some people have a misconception of the rich. Rich people get rich by being good businessmen. They don't get rich by giving away money without asking for an arm and a leg in returm. The idea that the Maloofs are billionaires is the perfect example. They can't be billionaires. They have sold the business that made the family the money although I have only heard that here and don't know if it is true. They are in serious trouble at the Palms. They are in trouble here although if you assume they are really not billionaires, the small profit pretty much guareanteed in this area moving forward may look better than putting everything at risk. I think they are desparate and thinking about rolling the dice to try to come up with the cash to salvage the Palms and their image.
What is a billionaire? Is it a person who controls a billion dollars worth of property or who actually has a net worth of a billion. They are the owners of the Kings on paper yet in reality own 51%. The same may become true at the Palms or worse.
Will they risk their minority partners' money knowing that at least 25% are totally against the move? Even rich people are human and I think the Maloofs are as human as you can be. They are not good businessmen or perhaps just got killed by the economy. There is an assumption that Samueli lights his Cuban cigars with $100 bills. Is he one of the few uneffected by the economy? I doubt it.
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