http://www.sacbee.com/content/business/story/14280733p-15089072c.html
What Kings mean to local business
A pro team opens doors nationally, some say, but others see little benefit.
By Jon Ortiz -- Bee Staff Writer
Published 12:01 am PDT Sunday, July 23, 2006
In December, the California Association of Student Financial Aid Administrators came to Sacramento for a convention. Its members spent more than $1 million at local businesses over six days and racked up 2,800 nights of local hotel room rentals.
And it wouldn't have happened without the Sacramento Kings, according to officials from the Sacramento Convention and Visitors Bureau.
They said they won over the association's event planner, IMN Solutions of Washington, D.C., during a skybox meeting at a Kings-Wizards game in 2003.
"When we're marketing to nationally based associations, they're a tough crowd, a spoiled crowd, that is offered everything under the sun," said Steve Hammond, the bureau's president and CEO. "They get hundreds of calls from all over the country. The one thing we know will get us in front of them is a suite at an NBA game."
The story illustrates what several Sacramento-area business owners say is the intangible value of having a successful major league sports franchise in town, and what will be lost if the team leaves for a better arena deal in another city.
Still, no study has ever conclusively shown that professional sports franchises boost the economy of their host cities.
"I view these things as a zero-sum game," said Stephen Pruitt, a professor of finance at the University of Missouri, Kansas City. "There's just no evidence to suggest that these kinds of projects do much for a local economy. You're just moving entertainment dollars around."
What the Kings mean to the region will likely be part of the Sacramento County Board of Supervisors' discussion when it meets Tuesday to consider putting a sales tax measure before voters. If approved, the tax would finance new arena construction at the Union Pacific railyard.
Hammond said that his bureau's estimates show that, from 2004 through 2011, delegates and exhibitors in town as a result of successful courtside recruiting will spend $14 million locally. The student financial aid association has already booked Sacramento for its 2011 convention and will spend an estimated $1.4 million while here.
"And of course, we expect that total will go up as we negotiate more conventions at Kings games," Hammond said.
In their travels, many local business leaders say, they learn that the Kings influence how Sacramento is perceived around the world and how locals think of the region. They also contend that a new sports and entertainment venue in the railyard would spur construction on surrounding land that city leaders have talked about developing for years with little result.
"The Kings are very, very valuable with very tangible benefits in my world," said Bob Dean, executive vice president for real estate brokerage Grubb & Ellis. "Before the Kings were here, I'd be out of town representing (the region). I was often asked, 'Is Sacramento closer to L.A. or San Francisco?' "
With few corporate headquarters to call its own and an economy largely based on government employment and construction, Sacramento needs the Kings to give it a national identity, said Sanjay Varshney, the business school dean at California State University, Sacramento.
"This is a government town, remember, and the business sector hasn't kept pace with the region's population growth," Varshney said. "The Kings have put Sacramento on the national map."
Sacramento and the Kings remind economics professor Bruce Johnson of Jacksonville, Fla., and its sole major league sports team, the Jaguars of the National Football League.
Johnson and a team of researchers in 2002 surveyed Jacksonville residents about what they perceived were the "tangible and intangible benefits" that the city enjoys from being a pro sports town.
"We found that there was overwhelming consensus. People believed that having a team makes Jacksonville a big-league city, gives it a national profile and even improves race relations," said Johnson, a professor at Centre College in Danville, Ky. "These are benefits enjoyed by everyone in the town, not just people who go to games or watch the team on TV."
The survey, summarized in the August issue of the Journal of Sports Economics, included a scenario and a question: The team is bought by out-of-town owners who will move it unless they get a new stadium. How much would you be willing to pay in taxes to keep the club here?
"About $30 million -- total," Johnson said. "That's the value of the Jags to people who live in Jacksonville. They love having a team, but they're not really willing to pay very much for it."
Still, it's a recognition tied to wins and losses. Few out-of-towners talked about Sacramento and the Kings before the team started what has been an eight-year postseason run in the 1998-99 season, Dean said.
"The turning point was making the playoffs, no doubt," he added. "The world takes notice of your city when your team is in the postseason."
So what happens if the team goes on a losing streak and misses the playoffs for a year or two?
"It wouldn't take Sacramento back to where we were before," Dean said. "It wouldn't mean we would fall all the way back to zero."
However, it would probably affect the ability of the Maloof family, owner of the Kings and the Monarchs, to bargain with Sacramento or any other city for favorable arena terms, Varshney said.
"They have leverage right now because they (the Kings) make the playoffs every year," Varshney said. "But that could change with a couple of losing seasons."
Troy Carlson, who owns two Old Sacramento businesses, Stage Nine Entertainment and G. Willikers Toy Emporium, said that the larger question is whether the community is serious about downtown development, particularly the railyard.
"The Kings aren't all that Sacramento is about. The team isn't the be-all and end-all," he said. "But it is a cornerstone to a new arena in the railyard. And a new arena in the railyard would be the cornerstone to getting the rest of the area developed."
The proposal that county officials will consider Tuesday for November's ballot calls for a quarter-cent sales tax increase that would raise about $1.2 billion over the next 15 years.
At least half of the money would go back to the county and cities. The rest would be used to build the arena, estimated to cost between $470 million and $542 million.
Not everyone supports the arena deal, however. People United, a grass-roots group including union activists, environmentalists and affordable-housing advocates, has criticized spending public money on an arena.
And the Sacramento County Taxpayers League argued that putting the quarter-cent tax proposal on the November ballot as a general tax is illegal.
By law, a sales tax increase for general purposes requires only a simple majority of votes for passage. But if the tax is to be used for a specific purpose, it requires a harder-to-achieve two-thirds vote.
Old Sacramento business owner Carlson calls the sales tax "minuscule" and figures that would not have much impact on his retail businesses.
"We have too much to lose if the Kings leave and this venue isn't built, especially if it would get railyard development moving," Carlson said. "It's just been all talk, and it's frustrating to drive by the railyards and see mounds of dirt. We need to get this done."
About the writer: The Bee's Jon Ortiz can be reached at (916) 321-1043 or jortiz@sacbee.com
What Kings mean to local business
A pro team opens doors nationally, some say, but others see little benefit.
By Jon Ortiz -- Bee Staff Writer
Published 12:01 am PDT Sunday, July 23, 2006
In December, the California Association of Student Financial Aid Administrators came to Sacramento for a convention. Its members spent more than $1 million at local businesses over six days and racked up 2,800 nights of local hotel room rentals.
And it wouldn't have happened without the Sacramento Kings, according to officials from the Sacramento Convention and Visitors Bureau.
They said they won over the association's event planner, IMN Solutions of Washington, D.C., during a skybox meeting at a Kings-Wizards game in 2003.
"When we're marketing to nationally based associations, they're a tough crowd, a spoiled crowd, that is offered everything under the sun," said Steve Hammond, the bureau's president and CEO. "They get hundreds of calls from all over the country. The one thing we know will get us in front of them is a suite at an NBA game."
The story illustrates what several Sacramento-area business owners say is the intangible value of having a successful major league sports franchise in town, and what will be lost if the team leaves for a better arena deal in another city.
Still, no study has ever conclusively shown that professional sports franchises boost the economy of their host cities.
"I view these things as a zero-sum game," said Stephen Pruitt, a professor of finance at the University of Missouri, Kansas City. "There's just no evidence to suggest that these kinds of projects do much for a local economy. You're just moving entertainment dollars around."
What the Kings mean to the region will likely be part of the Sacramento County Board of Supervisors' discussion when it meets Tuesday to consider putting a sales tax measure before voters. If approved, the tax would finance new arena construction at the Union Pacific railyard.
Hammond said that his bureau's estimates show that, from 2004 through 2011, delegates and exhibitors in town as a result of successful courtside recruiting will spend $14 million locally. The student financial aid association has already booked Sacramento for its 2011 convention and will spend an estimated $1.4 million while here.
"And of course, we expect that total will go up as we negotiate more conventions at Kings games," Hammond said.
In their travels, many local business leaders say, they learn that the Kings influence how Sacramento is perceived around the world and how locals think of the region. They also contend that a new sports and entertainment venue in the railyard would spur construction on surrounding land that city leaders have talked about developing for years with little result.
"The Kings are very, very valuable with very tangible benefits in my world," said Bob Dean, executive vice president for real estate brokerage Grubb & Ellis. "Before the Kings were here, I'd be out of town representing (the region). I was often asked, 'Is Sacramento closer to L.A. or San Francisco?' "
With few corporate headquarters to call its own and an economy largely based on government employment and construction, Sacramento needs the Kings to give it a national identity, said Sanjay Varshney, the business school dean at California State University, Sacramento.
"This is a government town, remember, and the business sector hasn't kept pace with the region's population growth," Varshney said. "The Kings have put Sacramento on the national map."
Sacramento and the Kings remind economics professor Bruce Johnson of Jacksonville, Fla., and its sole major league sports team, the Jaguars of the National Football League.
Johnson and a team of researchers in 2002 surveyed Jacksonville residents about what they perceived were the "tangible and intangible benefits" that the city enjoys from being a pro sports town.
"We found that there was overwhelming consensus. People believed that having a team makes Jacksonville a big-league city, gives it a national profile and even improves race relations," said Johnson, a professor at Centre College in Danville, Ky. "These are benefits enjoyed by everyone in the town, not just people who go to games or watch the team on TV."
The survey, summarized in the August issue of the Journal of Sports Economics, included a scenario and a question: The team is bought by out-of-town owners who will move it unless they get a new stadium. How much would you be willing to pay in taxes to keep the club here?
"About $30 million -- total," Johnson said. "That's the value of the Jags to people who live in Jacksonville. They love having a team, but they're not really willing to pay very much for it."
Still, it's a recognition tied to wins and losses. Few out-of-towners talked about Sacramento and the Kings before the team started what has been an eight-year postseason run in the 1998-99 season, Dean said.
"The turning point was making the playoffs, no doubt," he added. "The world takes notice of your city when your team is in the postseason."
So what happens if the team goes on a losing streak and misses the playoffs for a year or two?
"It wouldn't take Sacramento back to where we were before," Dean said. "It wouldn't mean we would fall all the way back to zero."
However, it would probably affect the ability of the Maloof family, owner of the Kings and the Monarchs, to bargain with Sacramento or any other city for favorable arena terms, Varshney said.
"They have leverage right now because they (the Kings) make the playoffs every year," Varshney said. "But that could change with a couple of losing seasons."
Troy Carlson, who owns two Old Sacramento businesses, Stage Nine Entertainment and G. Willikers Toy Emporium, said that the larger question is whether the community is serious about downtown development, particularly the railyard.
"The Kings aren't all that Sacramento is about. The team isn't the be-all and end-all," he said. "But it is a cornerstone to a new arena in the railyard. And a new arena in the railyard would be the cornerstone to getting the rest of the area developed."
The proposal that county officials will consider Tuesday for November's ballot calls for a quarter-cent sales tax increase that would raise about $1.2 billion over the next 15 years.
At least half of the money would go back to the county and cities. The rest would be used to build the arena, estimated to cost between $470 million and $542 million.
Not everyone supports the arena deal, however. People United, a grass-roots group including union activists, environmentalists and affordable-housing advocates, has criticized spending public money on an arena.
And the Sacramento County Taxpayers League argued that putting the quarter-cent tax proposal on the November ballot as a general tax is illegal.
By law, a sales tax increase for general purposes requires only a simple majority of votes for passage. But if the tax is to be used for a specific purpose, it requires a harder-to-achieve two-thirds vote.
Old Sacramento business owner Carlson calls the sales tax "minuscule" and figures that would not have much impact on his retail businesses.
"We have too much to lose if the Kings leave and this venue isn't built, especially if it would get railyard development moving," Carlson said. "It's just been all talk, and it's frustrating to drive by the railyards and see mounds of dirt. We need to get this done."
About the writer: The Bee's Jon Ortiz can be reached at (916) 321-1043 or jortiz@sacbee.com
