Education Points

[JB_kings]

The 20 million upfront and 122 million over 30 years isn't a bad deal. But it isn't exactly a bargain. Many were concerned that the yearly lease might be $1 a year. If you have to pay that large sum of money, then payment over term is the way to go. Even millionaires have a hard time coming up with 122 million in one shot.
However, they are going to get hit hard with the payback of 1997 loan. That has to be done upfront when they move out of Arco. If paying over 30 years is better, than paying out 73 million that was supposed to have 20 more years of payments is not an advantage. Also consider that in order to pay off this loan, they will have to sell off 85 acres of land plus pay approx 30 million out of pocket to cover the 73 million dollar balance. The land is valued at $500K an acre now. But usually land value increases over time and is worth more later than now. So while most people would like to ignore this as a factor, it really is significant.
Would it really help this measure pass if the 122 million was upfront? I don't really think it does. And to be honest, I really don't think the Maloofs can afford to pay 142 million out of pocket now and then another 73 million in 3-4 years. That is Bill Gates and Paul Allen territory. While we love to throw around the thought that the Maloofs are billionaire playboys, they are closer to millionaire playboys. To build the Palms and it's expansion tower they had to get loans for that construction.

 

[1kingzfan]

Outstanding, JB.

Summary of Maloofs' financial commitment:

$20 million up front

$4 million per year lease over 30 years = $120 million

(there's another $2 million in these two figures somewhere that doesn't show up, likely due to rounding to make the total $142 million)

$73 million Arco loan payout (exact timing? Upon occupation of new arena, subsequent disposal of Arco property, or when?) in around 3 or 4 years. This is offset by the value of the Arco land. JB's figure for estimating land value has a net Maloof out of pocket payout of $30 million after land disposal.

Maloofs are responsible for operating the arena and must pay for salaries, goods, services, maintenance, etc. Annual outlay unclear.

Now, what would be great is if someone could place these figures side-by-side with the last several arena deals and how the private vs public financing went for those other cities to compare. This is very important to show the public that our local government leaders negotiated a good deal with the Maloofs.

 

[whozit]

The Maloofs keep getting labeled "billionaire playboys," but yet none of the Maloofs individually are listed as billionaires on the newest list that recently came out. The family as a whole may be up in that catagory but one has to wonder how much of that is on paper and not in cash flow. To control a large distibuting network and casino represents/requires a large amount of non-liquid assets that count towards one's "monetary worth."

 

[hoopsfan]

I thought the property/land belonged to the city. ?

 

[JB_kings]

The city owns the 100 acres referred to as the hole in the ground where a stadium was to be built and a good chunk of the parking lot. The Maloofs own the Arco arena land and the rest of the parking lot which is 85 acres.

 

[kupman]

I'll tackle this one.

* My house hasn't burned down, so why should I pay for the fire department when all they do is put out other people's fires and save lives?
* I haven't had to call the police since I've lived in Sacramento, so why should I pay when all they do is protect the public?
* I don't have any kids, so why should I pay for schools when all they do is educate the community?
* I don't use the bus, so why should I pay for it when all it does is reduce traffic and pollution by keeping less vehicles on the road?

It's called the common good. I'm not arguing the arena has the benefits of the other things I listed. I'm just saying the "Why should I pay for it" argument is nonsense.

Very good points IMHO. I might add that when you give $1 to these services you (or city) do not expect $1 (or more) in return.

 

[Warhawk]

I don't care if you call it rent or a lease, you are still paying out of pocket for the use of the facility, which repays the owner for the construction costs.

 

[KevinSalvadori]

Hey, has anyone noticed what People United for a Better Sacramento spells if you use all the capitals....

...take your time.

 

[Circa_1985_Fan]

Matt Mahood(Director of the Chamber of Commerce) is on with Koz talking specifics about the tax, arena, etc. He's really eloquent in speaking about this, bringing up San Jose as a direct example for alot of things.

 

[BigWaxer]

Hey, has anyone noticed what People United for a Better Sacramento spells if you use all the capitals....

...take your time.

Just being fair KEV...

do the same for Fans Uniting for a new Sacramento Arena...


BTW Nice Post above JB... Agree with you 100%. Now how do you change the opinion of folks that believe that way.

 

[1kingzfan]

Bump.

I didn't want to lose this thread to page 2, since it has a lot of good discussion. We have been having other good discussions and presenting new issues as they arise and debating various education points in other threads.

A suggestion to the Mods: This site can be an even greater service to the local community if we somehow can provide a sticky thread at the top that lists issues raised and factual responses in a nice, neat format with no discussion. Let the discussions of issues continue in other threads and then lift the results of what's uncovered in these threads into the overall education sticky thread. A good bit of work to do, for sure, but it would be neat and useful.

 

[kennadog]

The 20 million upfront and 122 million over 30 years isn't a bad deal. But it isn't exactly a bargain. Many were concerned that the yearly lease might be $1 a year. If you have to pay that large sum of money, then payment over term is the way to go. Even millionaires have a hard time coming up with 122 million in one shot.
However, they are going to get hit hard with the payback of 1997 loan. That has to be done upfront when they move out of Arco. If paying over 30 years is better, than paying out 73 million that was supposed to have 20 more years of payments is not an advantage. Also consider that in order to pay off this loan, they will have to sell off 85 acres of land plus pay approx 30 million out of pocket to cover the 73 million dollar balance. The land is valued at $500K an acre now. But usually land value increases over time and is worth more later than now. So while most people would like to ignore this as a factor, it really is significant.
Would it really help this measure pass if the 122 million was upfront? I don't really think it does. And to be honest, I really don't think the Maloofs can afford to pay 142 million out of pocket now and then another 73 million in 3-4 years. That is Bill Gates and Paul Allen territory. While we love to throw around the thought that the Maloofs are billionaire playboys, they are closer to millionaire playboys. To build the Palms and it's expansion tower they had to get loans for that construction.

Exactly. Businessmen don't have boatloads of cash sitting around. Their wealth is invested and most of the Maloofs is invested in their businesses. Yes, they borrowed to add on the the Palms. And I'll guarantee the Palms has way better cash flow to pay monthly debt than the Kings, who have actually run a deficit some years.

And the original loan was $71 million, but it has accumulated deferred interest, so the pay off balance is actually over $80 million at this point. Why deferred interest? Because the team did not have enough cash flow to make fully amortized payments!! In other words, the team did not have enough cash flow to support payments on $71 million! So why people think the team could afford debt payment on $500 million is beyond me.

Note that as the team's cash flow came out of the red, mostly due to extra money from playoff tickets, the Maloofs actually made a sizable extra payment on the loan ($12 million, I think.) They are ahead of schedule on the payments, which they did not have to do. As a matter of fact, it wasn't to their financial advantage to do so.

And Paul Allen, who is ridiculously more rich than the Maloofs, went bankrupt on his arena. According to Forbes, Allen is the 6th most rich billionaire in the world. The Maloofs aren't even on the billionaire list.

 

[VF21]

Bump.

I didn't want to lose this thread to page 2, since it has a lot of good discussion. We have been having other good discussions and presenting new issues as they arise and debating various education points in other threads.

A suggestion to the Mods: This site can be an even greater service to the local community if we somehow can provide a sticky thread at the top that lists issues raised and factual responses in a nice, neat format with no discussion. Let the discussions of issues continue in other threads and then lift the results of what's uncovered in these threads into the overall education sticky thread. A good bit of work to do, for sure, but it would be neat and useful.

Okay, since you suggested it, if you prepare it, I'll make sure it gets stickied.

 

[1kingzfan]

Sorry, I don't have the time due to upcoming changes in my available time. Just thought I'd throw it out there, though, since it would help so many.

 

[Prophetess]

ok, brief bit from The Grapevine Independent, local paper here in Rancho. According to Linda Budge(whom it is noted is a long time Kings fan)
"Since the money that would flow back to the city would be based on what it collects, a conservative projection for Rancho would be $29.92 million over the 15 years. That's based on Rancho generating about 5 percent of the sales tax collected.

The same projections put Citrus Heights' take at $36 million, Elk Grove at $53 million, Folsom at $57 million, Galt at $3.8 Million, Iselton at $535,366; Sacramento at $188.8 million, and Sacramento County at $226 million."


and further in the article:

"This is $29.9 million of found money we wouldn't have otherwise," she said. It could be used to fund local dreams like a children's museum or teen center, or to upgrade police services, parks, roads, or just about any other purpose local government chooses."



and my favorite part:

Depending on how survey questions are worded, support in Cordova has ranged from 47 to 62 percent.

 

[kupman]

I have a question that maybe somebody here could answer. It stems from a phone call on Grant's show yesterday and it was not really answered on the show. If the arena is $500 million and it is fiananced, at what interest rate is the arena fiananced, over what period of time and what is the final or true cost of the arena once interest has been figured? I have a guess on the answer, but I would like to know for sure. Thanks in advance.

 

[JB_kings]

I recall for watching the meeting the other night that the low-high numbers are 35/50 million. The low-high corresponds to the cost of SEF as it was given as a low-high.

 

[DocHolliday]

Unless the Maloofs and the County start some sort of media blitz on all local radio stations and all local tv stations this measure will NOT pass. I don't listen to much regular radio because I have SIRIUS, but I have been popping my head into to certain shows on regular radio to see if the Arena issue has been coming up, and boy has it.

This morning on Rob Arnie & Dawn on 98 rock the issue came up. Rob was pointing out how it's all smoke and mirrors and it's not really that important to the area etc. etc. etc. The guy is generally an intelligent guy and the listeners respect his opinion. This is the number one morning show by a LANDSLIDE in the sacramento area. They also said the other local sports shows are not taking calls from the negative side and only promoting the positives. So, to balance it out they only let callers through with the downsides of the measure.

What pissed me off even more was the old statment came out, The Kings don't NEED a new arena. Whether we think they do or not Commission David Stern says they do, and Arco won't be an NBA certified arena soon. That's it. That's the end of that discussion.

 

[1kingzfan]

What pissed me off even more was the old statment came out, The Kings don't NEED a new arena. Whether we think they do or not Commission David Stern says they do, and Arco won't be an NBA certified arena soon. That's it. That's the end of that discussion.

While what you state is certainly true, I don't think that is anywhere near good enough to coerce the people in the County sitting on the fence to vote for this measure. People don't like to be forced into anything. There needs to be some solid reasoning that is placed before the public that is convincing.

Education Point #1 (at the start of this thread):

1) Specifics on why a new arena is NECESSARY and not just something nice to do (eg, keeping our only pro sports franchise, potential long-term economic and public image impacts of losing the Kings, NBA arena mandates for franchises, existing condition of Arco, existing service level limitations of Arco, additional revenues to downtown and the area as a whole from a new SOTA arena and surrounding businesses, SOTA arena is necessary "infrastructure" to help maintain regional growth pace - which translates into higher property values, greater salaries for all, etc).

This is just a start to trying to address this difficult issue. Others have mentioned select safety issues (which will not be convincing since the arena is still operating) and perhaps maintenance issues with Arco. This issue needs to be thoroughly addressed by our civic leaders, not just "the NBA says so", if the measure is expected to pass.

Only then will radio personalities like Rob and other current opponents be then forced to address the SUBSTANCE of the issue. Right now, it's oh so easy to take pot shots at a lot of the components of this measure, since very little official explanation of things has yet to be made public. We're trying to do that job here as amateurs, but we don't know enough collectively to explain many of the issues.

Once the DETAILS of how things evolved and specific impacts and benefits are made public, the real debate will begin. And I think it will be much tougher on the opponents to hold their line when they have to address specifics rather than generalities.

But somebody in charge better get the public education going pronto!!!

 

[DocHolliday]

While what you state is certainly true, I don't think that is anywhere near good enough to coerce the people in the County sitting on the fence to vote for this measure. People don't like to be forced into anything. There needs to be some solid reasoning that is placed before the public that is convincing.

Education Point #1 (at the start of this thread):

1) Specifics on why a new arena is NECESSARY and not just something nice to do (eg, keeping our only pro sports franchise, potential long-term economic and public image impacts of losing the Kings, NBA arena mandates for franchises, existing condition of Arco, existing service level limitations of Arco, additional revenues to downtown and the area as a whole from a new SOTA arena and surrounding businesses, SOTA arena is necessary "infrastructure" to help maintain regional growth pace - which translates into higher property values, greater salaries for all, etc).

This is just a start to trying to address this difficult issue. Others have mentioned select safety issues (which will not be convincing since the arena is still operating) and perhaps maintenance issues. This issue needs to be thoroughly addressed by our civic leaders, not just "the NBA says so", if the measure is expected to pass.

Only then will radio personalities like Rob and other current opponents be then forced to address the SUBSTANCE of the issue. Right now, it's oh so easy to take pot shots at a lot of the components of this measure, since very little official explanation of things has yet to be made public. We're trying to do that job here as amateurs, but we don't know enough collectively to explain many of the issues.

Once the DETAILS of how things evolved and specific impacts and benefits are made public, the real debate will begin. And I think it will be much tougher on the opponents to hold their line when they have to address specifics rather than generalities.

But somebody in charge better get the public education going pronto!!!

The education defiintely has to stop. And while "The NBA says so" may not be enough to get the voters to vote yes, it does make the point that the Kings don't need a new arena a non point. It shouldn't be in the argument. Whether you me or anyone else thinks they do or don't, the NBA will not certify the arena soon. What the NBA says goes. There's no discussion about it. So, if you want to keep the NBA team and have much better events then you get the arena. If that's not enough of a reason for someone as a voter than they vote no. I get that part, but that specific point shouldn't be apart of the argument.

 

[1kingzfan]

Like it or not, this is now in the POLITICAL realm.

You can beat folks on the head with a stick or you can feed them candy.

This is now about convincing half of the County's voting residents of the urgency, need, and benefits of the proposed measure. Knowing how people are, they generally liked to be reasoned with. So my opinion is that the stick should be held in the background, but in full view, and that solid arguments be brought forth of why this is needed.

 

[DocHolliday]

Like it or not, this is now in the POLITICAL realm.

You can beat folks on the head with a stick or you can feed them candy.

This is now about convincing half of the County's voting residents of the urgency, need, and benefits of the proposed measure. Knowing how people are, they generally liked to be reasoned with. So my opinion is that the stick should be held in the background, but in full view, and that solid arguments be brought forth of why this is needed.

Once again I agree. Most of the arguments against the arena deal aren't solid, no where near in fact. One of them being that the Kings don't need a new arena.

 

[kupman]

This morning on Rob Arnie & Dawn on 98 rock the issue came up. Rob was pointing out how it's all smoke and mirrors and it's not really that important to the area etc. etc. etc. The guy is generally an intelligent guy and the listeners respect his opinion. This is the number one morning show by a LANDSLIDE in the sacramento area. They also said the other local sports shows are not taking calls from the negative side and only promoting the positives. So, to balance it out they only let callers through with the downsides of the measure.

If there are alot of people who heed the advice of the person you are talking about above the city is in big trouble for reasons that go well beyond the arena. The dude is a moron. It is nice to know that they are stacking the callers because he thinks 1140 is stacking calling. Does he actually have proof of what is going on at 1140?

 

[kennadog]

Dave Tamayo was on 1140 the other morning for some time. 'Nuff said about fairness.

 

[Kingzrool]

The dude is a moron.

Of course he is a moron. If his is the #1 show, that is part of the deal. (should probably mention that I do not know who he is nor have I ever heard this show). But it will be people like him that sway this thing one way or the other. It has probably been done, but if not, one of you eloquent and organized folks who have their facts straight, should write him and others of high influence a letter. The organized campaign will come in time (I hope), but in my experience, people like this will be more convinced by passionate individuals. If we could get these guys talking about the reality of how screwed Sactown will be without a new arena, that could be key.

 

[Kingsgurl]

They also said the other local sports shows are not taking calls from the negative side and only promoting the positives. So, to balance it out they only let callers through with the downsides of the measure

That's odd, i've heard callers on both sides of the argument on 1140, AND they let that windbag RE Graswich on all the time.

 

[JB_kings]

Dave Tamayo was on 1140 the other morning for some time. 'Nuff said about fairness.

And 1140 is the only radio station that thinks Bob Graswich is worth listening to.

I guess I must be an old fogey because I really have no clue who this Rob guy is. I guess if he's against this, we're all doomed.

 

[kupman]

I guess I must be an old fogey because I really have no clue who this Rob guy is.

.....consider yourself fortunate.

 

[Prophetess]

I have to say for me this is more about what it can do for our city and our communities then it is having a better arena. see post #105. I know I have convinced a few people that this would be beneficial to the community with those numbers. Now, that doesn't mean I don't want one, I just want the other benefits just as much. .

 

[slugking50]

The Maloofs/The city had a sitdown/seminar with local media yesterday to educate. Majority of the KHTK and other CBS Radio people were there. Some of the TV Stations were there too.


Theres supposed to be another one Thursday.