Anaheim talks Kings again

[Mike0476]

Our favorite OC Register reporter is at it again as well as the mayor of Anaheim.

Call me crazy but I still believe we will move forward with a new downtown arena.

Hope to see you on Feb. 14th at Sac City Hall and I'm still waiting to hear from everyone.

http://www.ocregister.com/sports/nba-338460-sacramento-relocation.html

That's why some people believe the NBA, which in May promised the Kings owners it would support their desire to move the franchise if a "viable arena plan" in Sacramento didn't materialize by March, will allow the process to drag on by extending the relocation deadline for the second consecutive year.


That, however, is not under consideration, according to NBA spokesman Tim Frank.
Earlier this week, I asked Frank in an email "if the relocation deadline is as flexible as it was last year, when two extensions were granted (by the NBA Board of Governors) or whether there has to be a financing plan announced by March 1, to the NBA's satisfaction."


This was Frank's response: "The deadline has not been extended and remains March 1."

Nine months later, the Maloofs are still waiting for details. They reportedly haven't even been asked how much they're willing to kick in as the anchor tenants. If they're expected to contribute $80 million to $110 million, as the Sacramento Business Journal recently speculated, there won't be a new arena. They don't have it.


It's not surprising that it's difficult to find anyone who believes the financial term sheet for the proposed $406 million sports and entertainment complex in downtown Sacramento – detailing the various public and private contributions toward the project – will be in place by March 1.


That's because the main component of the proposed arena funding is parking privatization – leasing out city-owned parking garages to a private operator for up to 50 years, which could bring in a reported $115 million-$195 million, according to the Sacramento Business Journal. (City Councilman Steve Cohn recently told the SBJ that they'll need about $170 million from parking to make it work.)


It's a time consuming process, too. This past Monday, the city received 13 "letters of intent" from parking operators interested in bidding. On Feb. 14, the City Council presumably will vote to proceed with the requests-for-proposals (RFP) process. Then come the reviews and interviews.

Now here is Mayor Tait's 2012 State of the City

http://www.anaheim.net/title/City+Council/Mayor+Tom+Tait/2012+STATE+OF+THE+CITY+ADDRESS/

NBA and OC IDENTITY

Now I’d like to change gears and spend a few minutes talking about something that all of my buddies want to talk about these days—and that’s bringing the NBA to Anaheim.

Anaheim made headlines when the owners of the Sacramento Kings announced their desire to move their team to Anaheim. However, the NBA gave Sacramento more time to build a new arena for the Kings, but they set a March deadline. That deadline is approaching and we’ll know more in the next month or so about where the Kings future stands but, regardless, there is no doubt that Anaheim is NBA ready. I’m confident that we will get a team.

In pursuing a NBA team, we faced the argument that Los Angeles already has two teams and doesn’t need a third. This argument is wrong and, I’ve got to tell you, it really bugs me.

Why? Because we’re not LA.

Everyone in this room knows that Orange County is not Los Angeles. We have our own unique identity and population. A county of three million people can easily support an NBA franchise. By the way, three million people is more than the population of the city of Chicago.

However, unfortunately, much of the world looks at Orange County as part of Los Angeles. Being looked at as a suburb of Los Angeles not only hurts us with the NBA process, but also with federal and state government spending and business relocation.

Three million people in the County of Orange should not be suburb to anybody. One of the challenges we face, however, is that in our great county there is no place one can point to and say, “There’s the center of the county.” It’s vague… LA doesn’t have that problem. When you look at Los Angeles and say, “where’s the center of Los Angeles?” you naturally point to downtown L.A.

I would argue that Anaheim is, in many people’s minds, the center of Orange County. Disneyland, the Convention Center, Angel Stadium and the Honda Center together attract more than 25 million people every year. There are few places in the world where so many people flock to such a small area. In the next couple of years, I intend to work with the Visitors and Convention Bureau, with Disney, the Angels, the Ducks and a new local NBA team to bring recognition to Orange County as its own entity—not a suburb of Los Angeles.

 

[Mike0476]

"I’m confident that we will get a team." - Anaheim Mayor Tom Tait

"I'm confident that we will get a new downtown arena - keep our Kings, concerts, events, regional & local $, etc." - Mike Tavares #FANS

 

[Dime Dropper]

Am I justified in being extremely worried at the speed of progress here? We only have a month to figure out a financing plan. I know there is a meeting on Feb. 14th but is it feasible to have a plan in place by the deadline? It just seems to me that we're moving awfully slowly, and the deadline could reach us in one big anti-climax.

 

[SacTownKid]

Interesting point in the article about the Maloofs chipping in and them potentially not having the funds to do so. David Stern has already made it very clear that the norm in this instance is that the owners do get their share of the burden. If the NBA deems fit whatever number they end up at and the Maloofs don't have it, they'll be asked to sell the team or at the very least have the option of taking a loan from the league I would imagine.

 

[RookieOfTheDay]

Something concrete and final needs to emerge here pretty soon. Something that will silence these OC vultures once and for all. i'm cautiously optimistic that this gets done this time. It will be a huge stress relief when it finally does. It will be easier to be patient with the team once we know they're staying for good.

 

[Spike]

Wow. I called it in my predictions last week...creepy.

 

[Brac-o-matic]

I totally agree with the Rob McAllister sentiment. The financing won't be in place by March 1st. However, there is more pro-arena progress then there has been in 10+years, and I think that was the real goal-- to prove to David Stern that the city is for real this time, and we're not the Heather Fargo-led, wishy-washy cow town that talks a big game, but has no real clue about how to get an arena built. We have the determination, we will get this done, and if the Maloofs can't contribute their fair share, they can be replaced..

 

[Capt. Factorial]

"I’m confident that we will get a team." - Anaheim Mayor Tom Tait

The Los Angeles Clippers have two young stars, will certainly be looking to get out from under the spotlight of the Lakers, and their lease at Staples runs out after the '13-'14 season. I'm confident that Anaheim will get a team (in two years) too.

 

[Circa_1985_Fan]

I've got a few adjectives I'd like to use to describe Tom Tait...but I will digress...

 

[JB_kings]

I don't have any comments about Tom Tait. He's just doing what he can do to lobby his position.

And Randy Youngman is just wasting his time here.

 

[VF21]

The Los Angeles Clippers have two young stars, will certainly be looking to get out from under the spotlight of the Lakers, and their lease at Staples runs out after the '13-'14 season. I'm confident that Anaheim will get a team (in two years) too.

You know, that makes a LOT of sense. Of course, there's no telling how Donald Stirling would look at it.

 

[nebs]

I'm just going to say it. "Anahine" can blow me.

 

[BMiller52]

I'm just going to say it. "Anahine" can blow me.

cosigned, my response to Tait is go to hell. Go get someone else's team, we finally have something positive going and a chance at our arena and they are still pining after the Kings trying to pull the rug out from under us.

 

[kennadog]

Pure speculation, thus garbage. I'm quite sure that how much the Maloofs/NBA are willing to kick in has been in negotiations. It's supposed to be part of the financing plan's term sheet to be completed by March 1st. It's the parking amount that will come later. Might there be delays in the term sheet. Possibly, if the negotiations are going roughly, which no one knows. If the Maloofs actually are ignorant about how much they'll be asked to pony up, it's because theri letting the league office do the negotiating of the terms.

So Anaheim, !@#* you!

 

[Hoovtrain]

cosigned, my response to Tait is go to hell. Go get someone else's team, we finally have something positive going and a chance at our arena and they are still pining after the Kings trying to pull the rug out from under us.

Nebs and BMiller, what has happened to the 49erWebzone? it was acting funny the other day and now is completely down (at least the forum part).

 

[RookieOfTheDay]

I'm just going to say it. "Anahine" can blow me.

I can't wait until this is all over and everyone down there who was so sure they were going to pillage our team, even bragging about it and rubbing it in our faces, has to eat crow. I've never seen vultures eat crow before.

 

[Livinthedream]

Don't know how much the Maloofs will contribute, but some of the logic of the article doesn't make sense. If the Maloofs don't have $100 mil to put into a new arena, where are they going to get $100 mil to relocate the team? At least if they stay in Sac, they could spread that payment out over a lease of some sort. Just sayin...

 

[BMiller52]

Nebs and BMiller, what has happened to the 49erWebzone? it was acting funny the other day and now is completely down (at least the forum part).

corrupted database or something, webbie spent like 18 hours fixing it and it's back up now.

 

[Trueblood]

The Los Angeles Clippers have two young stars, will certainly be looking to get out from under the spotlight of the Lakers, and their lease at Staples runs out after the '13-'14 season. I'm confident that Anaheim will get a team (in two years) too.

I hope you're right. Not just from a Kings or NBA standpoint but just from a common sense standpoint. Major sports teams should play in their own arenas and not share with another team in the same sport.

Unfortunately, I just don't see it under Sterling's watch. He has to sell or pass away for it to happen unless AEG doesn't renew the lease. As far as I know, they can just evict the Clippers if they want and in that case, the Clippers would have no choice but to go to Anaheim. It would help the Milwaukee's and Memphis' of the world if you had one less relocation option out there as well as the Kings. It's just that Sterling won't bow down to Samueli's demands. The Maloofs are desperate and Sterling's a billionaire.

 

[Trueblood]

As far as the Maloofs are concerned, I'm thinking that a $3 million a year rent fee over 20 years is what we'll wind up with. No inside sources or anything but just a gut feeling of what they think is fair and what the city will be willing to accept.

Assuming we get the $170 million for parking, that's $230 million.

A $2 ticket user fee also sounds fair to me. With AEG managing the building, we're looking at booking 200 events a year. Assuming an average of 15,000 heads a night, that's $30,000 a night x 200 and you get $6 million a year. Over 20 years that's another $120 million.

Now you're up to $350 million. I'm thinking the cell phone towers, naming rights and maybe an upfront payment from AEG will get us over $400 and enough to cover the bonds.

Plus, that's just over a 20 year period. If I'm not mistaken, the bonds get repaid over a 30 year period so if there's a cost overrun, you just extend the 20 years another 10 to cover the bonds.

 

[JB_kings]

This is from the Sacramento Business Journal about a week ago. Not sure how accurate it is. I can't read the associate article because I don't pay for their subscription.

 

[Capt. Factorial]

I think the ticket surcharge should be well over $2. More like $4-5 per ticket. That's really not unaffordable when you get down to it and the users don't really even think about it anyway because it's wrapped into the cost of the tickets. Nobody would refuse to go over that. Trueblood was estimating 3M visitors a year, but even if you do a pessimistic estimate of only 2M per year, over a 30-year period that's 60M visitors at $5 each - $300M total. That would pay for $150M of bonds upfront - and the Sacramento Business Journal is estimating $5 total in their optimistic scenario?

I don't understand why this isn't talked about more. There's a big pool of money there in ticket surcharges that can get us over the top. We need to tap into it.

 

[Trueblood]

Good find above. I'd be more than happy with the pessimistic estimates coming from what the Maloofs will give. I still say $60 million and I'd even be happy with that but if they can give us anywhere from 80 to 110 then that's gravy.

$50 million is what I expect from AEG although there should be a lower pessimistic estimate. They've hinted at balking so it could go as low as $20 or $30 million with them dropping out altogether. If so, a lower caliber operator is probably only throwing $10 million into the ring.

OTOH, I don't see how they can give such low numbers on naming rights and ticket surcharges. $2 is a reasonable surcharge and much lower than what other places charge. Multiplied by all the people in the stands and amount of events taking place and you get way more than $5 million. A very pessimistic estimate would be a 10 year surcharge multiplied by just 100 events and just 10,000 spectators per event. That still gets you to $20 million with a 20/200/15,000 optimistic estimate getting you to $120 million.

Naming rights isn't as big as it used to be but there's someone out there who will take advantage of a new arena and what will possibly be a good team by then. $5 million is too low. $5 PER SEASON would be an optimistic estimate with a 10 to 20 year contract. I'm looking at $30 million as a low estimate and $100 million as optimistic.

 

[JB_kings]

I had similar questions about the numbers on that graphic too. It's really misleading. I don't think anybody has ever stated that all the funds to build the arena would be upfront. It has to be split between the funds generated before construction and those that would be contributed over long term. I think the parking, land sales & AEG were most often mentioned as upfront money needed to get site prep and construction started. The rest is probably income produced on a scheduled basis such as the Kings lease payments, hotel taxes, rights, etc. This would mean some type of bonds or loans are needed to finish the construction. Which brings in the whole terms of payback, interest, blah, blah, blah.

So a true picture would show the upfront cash on hand and how much of the construction of the ESC that covers. And the rest is financed to finish. Not really different from buying a house in that sense.

 

[Warhawk]

I think parking will be higher than everyone is thinking here. Like KJ slinking into the NBA meeting with $10 million in his back pocket and surprising folks, I think they are keeping this close to the vest and will come out pretty well when bids actually come rolling in.

I agree on the ticket surcharges as well. That seems unduly low.

 

[Trueblood]

I had similar questions about the numbers on that graphic too. It's really misleading. I don't think anybody has ever stated that all the funds to build the arena would be upfront. It has to be split between the funds generated before construction and those that would be contributed over long term. I think the parking, land sales & AEG were most often mentioned as upfront money needed to get site prep and construction started. The rest is probably income produced on a scheduled basis such as the Kings lease payments, hotel taxes, rights, etc. This would mean some type of bonds or loans are needed to finish the construction. Which brings in the whole terms of payback, interest, blah, blah, blah.

So a true picture would show the upfront cash on hand and how much of the construction of the ESC that covers. And the rest is financed to finish. Not really different from buying a house in that sense.

That's pretty much it. Someone mentioned that the Sacramento market isn't big enough to support $400 million in bonds but that the $200-250 number would get it done. That's where the up front parking money comes in. If they can get $200 from parking then they don't have to raise anymore upfront money since that and the bonds will cover the cost of building plus interest. The rest of the items would pay off the bond amount over a 30 year period like you mentioned.