Here is the other article from the Bee, but this time on the other events that take place, the financial rewards and risks, etc.
From concerts to the circus, Arco stays busy so the Kings can keep.... Paying the Bills
Arena officials vogorously court other events
The Sacramento Bee
April 16, 2002
Author: Gilbert Chan
Bee Staff Writer
Estimated printed pages: 9
After the last Sacramento Kings fan exits Arco Arena, a crew of workers gets busy removing the basketball court. Outside, a parade of dump trucks waits to haul in dirt to build a race track for monster trucks.
In less than 20 hours, Arco's seats are again filled - this time with Monster Jam fans cheering and stomping as 600-horsepower vehicles roar into the arena.
Monster truck fans may not know it, but by attending shows at Arco they help compensate for the arena's lack of cash-producing amenities - upscale restaurants and bars, abundant luxury suites and club boxes - found at most of today's other professional sports arenas. The revenue such fans generate help the Kings afford a $55.1 million payroll, fifth highest this season among the 29 teams in the National Basketball Association.
While Arco is famous for being the home of the Kings, the Kings' need for cash has turned the 14-year-old arena into the staging ground for about 170 performances a year, including Kings and Monarchs games, circuses, concerts, ice shows, high school basketball playoff games and motor races.
Many of the events serve niche markets, attracting 6,000 to 9,000 fans at a time, but taken together with Kings games, they draw about 2 million visitors a year to Arco, the Kings say. Combined with Kings games, these events generate about a fourth of the revenue for Maloof Sports and Entertainment, owner of Arco Arena, the Kings and the Monarchs of the Women's National Basketball Association.
"The Kings being the owners of their arena helps them maximize all their revenue areas," said Hadrian Shaw, a sports analyst with Kagan World Media in Carmel. "That in turn helps them to pay for the higher costs where other small-market teams may not afford to do so."
To rent Arco, Maloof Sports charges $10,000 or 15 percent of gross ticket sales, whichever is greater, plus it takes all the revenues from parking, concessions and advertising in the arena.
While Maloof Sports never has to worry about the rent going up, there are inherent risks with owning an arena. There is overhead - from salaries to utilities - and the ever-growing pressure to fill open dates with popular events that will sell plenty of tickets. Arco seats 17,317 for basketball and more than 19,000 for major concerts in the 442,000-square-foot arena, the largest indoor building in the Sacramento region dedicated to sports and entertainment.
Adding to the risks are the increasing competition for the entertainment dollar from the 11,000-seat Raley Field in West Sacramento and the 18,500-seat AutoWest Amphitheatre concert venue near Marysville.
John Thomas, president of Maloof Sports, estimates the amphitheater last year diverted 10 to 12 concerts from Arco, or about $1 million in net income. The sale of about 900,000 tickets each year to see the River Cats, the minor-league baseball team that plays at Raley Field, cuts into walk-up ticket sales for Monarchs games, Maloof officials say, though they have no hard numbers.
"These kinds of venues make the competition greater for the Kings. There are only so many dollars for entertainment and advertising," said Tom Friery, Sacramento city treasurer. Friery meets regularly with Maloof Sports officials to review the franchise's finances, as part of an arrangement set up after the city loaned $73 million to the Kings previous ownership, in 1997, to help restructure the club's debt.
Built in 1988 with $40 million in private financing, Arco lacks fancy restaurants and has about a third of the club boxes and luxury suites of the average NBA arena.
Joe and Gavin Maloof, owners of Maloof Sports, have invested more than $6 million to dress up the arena since they took control of the franchise in July 1999. They also have brought in at least two consultants who came to the same conclusion independently: It is not feasible to remodel Arco or physically possible to add more revenue-producing amenities.
The arena has a no-frills concrete concourse and a cramped commercial kitchen. In some of the restrooms, holes remain where framed advertising signs once hung. The battleship-gray paint at the ticket turnstiles is worn, showing patches of bare concrete.
The building has 30 luxury suites typically leased for three, six or 10 years for up to $200,000 annually. The average yearly rental is about $150,000.
The average NBA arena, by comparison, has 19,500 seats and, more importantly, 84 suites. Chicago's United Center tops the league with 212 suites. Arco ranks 25th out of the 29 NBA teams in terms of suites.
"Teams are looking to maximize their revenues by getting more luxury suites. The ones who are paying the freight are the ones in the suites," said Glenn Wong, a sports law and labor relations professor at the University of Massachusetts, Amherst.
Even with Arco's age and limitations, the Maloofs maintain publicly that they are happy with the arena. Even as the city studies building a $300 million arena in the downtown railyards to spur development, the Maloofs and Thomas say they are focused on trying to make the best of Arco.
"If they don't want it, we're OK here," Joe Maloof said of city officials studying whether to help the Kings pay for a new arena. "We do well here. We're always going to try to improve what we have here at Arco."
Thomas describes Arco's environment as "one of a kind," and says fans haven't complained about the arena's limitations.
"There's some element to human nature that sometimes says the grass is always greener elsewhere," Thomas said. "But the grass is very green right here at Arco. It (a new arena) is not even on our radar screen."
Nevertheless, Maloof Sports joined the city and Union Pacific, which owns the downtown railyards, in splitting the cost of a $150,000 study looking at the feasibility of a new arena downtown. While it would take several years before construction could even begin, a new downtown arena would likely have many of the amenities found in more upscale facilities in the Bay Area.
The Arena in Oakland - home to the NBA's Golden State Warriors - was gutted and rebuilt for $121 million in 1996-97 to contemporary standards. The rebuilt arena features pricey restaurants, a trendy sports bar for club-seat holders only, an Internet cafe and an arena platform for a live band and disc jockey. The arena was expanded to 19,596 cushioned seats for basketball, 72 suites, 1,000 courtside seats and 4,000 sideline club seats.
The Compaq Center in San Jose - home of the Sharks of the National Hockey League - is just five years older than Arco, but cost more than four times as much to build. It features polished brass restroom fixtures, expensive terrazzo tile flooring, carpeting, more than 17,000 cushioned seats, plush private conference rooms, a 475-seat sit-down, order-off-the-menu restaurant and a casual plaza club bar and restaurant. On the upper level, large pantries are used for food storage and prep areas to serve the 65 luxury suites.
Without such revenue-producing amenities at Arco, Maloof Sports focuses on trying to land as many events as possible each year, and to sell as many tickets as possible.
Because the Kings and Monarchs represent about a third of the events held at Arco every year, officials must book regular events such as the circus and ice shows to fill multiple dates and appeal to a broad audience.
In 2001, the arena had 171 events catering to a spectrum of entertainment tastes. The lineup included the World Wrestling Federation, rockers Elton John and Billy Joel, opera star Luciano Pavarotti, religious revivals, a food show, Arenacross motorcycle races and a California State University, Sacramento, graduation.
Eric Cuthertson, assistant director of North American tours for Feld Entertainment, said Sacramento is a good draw for its Disney on Ice and Ringling Brothers shows. Disney on Ice and the circus, which had 26 performances at Arco last year, draw families from as far as Chico, Modesto and Grass Valley.
"We've done very, very well. The economy in Sacramento has been very good in the last couple of years. It's a great venue for us," Cuthertson said.
Vacaville resident Kathy Denham agrees. She has attended concerts, religious events, ice shows, basketball and soccer games and children's programs at the arena. She prefers Arco to Oakland's upscale arena.
"It's so accessible. I like Arco. You have so many different events. It adds to the quality of life of our family," Denham said.
While Maloof Sports officials say they do not break down the revenue each event generates (or even for non-basketball events vs. basketball events), big-name concerts typically draw bigger crowds and more revenue than ice shows and the circus. And the competition for the big concerts has grown fierce in the Sacramento region.
Big-name entertainers prefer to perform at the amphitheater near Marysville rather than Arco because they usually receive bigger fees, said Gary Bongiovanni, editor and chief of Pollstar magazine, a Fresno-based concert trade publication.
The amphitheater is owned by Clear Channel Entertainment, which handles more than two-thirds of the major concert business in the United States.
"Clearly it's more profitable for them (Clear Channel) to play dates in the amphitheater because it's their facility," Bongiovanni said. "They're going to try to steer as many shows as possible into their network of amphitheaters."
Some artists prefer to play indoors because they can control the climate and environment, Bongiovanni said. But in the end, most decisions are dictated by money. And entertainers can make more money if their promoters don't have to pay rental fees at Arco.
To battle the competition, the Maloofs in September gave Mike Duncan, former head of Arco Arena operations, a new job as vice president of arena programming.
With his new assignment, Duncan is assembling a small staff to generate more ticket sales and events.
"If I can sell 500 more seats (for each non-Kings event), it affects our bottom line," Duncan said.
But even that goal won't be easy, Friery said.
"They are more offensive-minded in getting these shows. These guys have to compete harder," the city treasurer said of the Arco efforts.
From concerts to the circus, Arco stays busy so the Kings can keep.... Paying the Bills
Arena officials vogorously court other events
The Sacramento Bee
April 16, 2002
Author: Gilbert Chan
Bee Staff Writer
Estimated printed pages: 9
After the last Sacramento Kings fan exits Arco Arena, a crew of workers gets busy removing the basketball court. Outside, a parade of dump trucks waits to haul in dirt to build a race track for monster trucks.
In less than 20 hours, Arco's seats are again filled - this time with Monster Jam fans cheering and stomping as 600-horsepower vehicles roar into the arena.
Monster truck fans may not know it, but by attending shows at Arco they help compensate for the arena's lack of cash-producing amenities - upscale restaurants and bars, abundant luxury suites and club boxes - found at most of today's other professional sports arenas. The revenue such fans generate help the Kings afford a $55.1 million payroll, fifth highest this season among the 29 teams in the National Basketball Association.
While Arco is famous for being the home of the Kings, the Kings' need for cash has turned the 14-year-old arena into the staging ground for about 170 performances a year, including Kings and Monarchs games, circuses, concerts, ice shows, high school basketball playoff games and motor races.
Many of the events serve niche markets, attracting 6,000 to 9,000 fans at a time, but taken together with Kings games, they draw about 2 million visitors a year to Arco, the Kings say. Combined with Kings games, these events generate about a fourth of the revenue for Maloof Sports and Entertainment, owner of Arco Arena, the Kings and the Monarchs of the Women's National Basketball Association.
"The Kings being the owners of their arena helps them maximize all their revenue areas," said Hadrian Shaw, a sports analyst with Kagan World Media in Carmel. "That in turn helps them to pay for the higher costs where other small-market teams may not afford to do so."
To rent Arco, Maloof Sports charges $10,000 or 15 percent of gross ticket sales, whichever is greater, plus it takes all the revenues from parking, concessions and advertising in the arena.
While Maloof Sports never has to worry about the rent going up, there are inherent risks with owning an arena. There is overhead - from salaries to utilities - and the ever-growing pressure to fill open dates with popular events that will sell plenty of tickets. Arco seats 17,317 for basketball and more than 19,000 for major concerts in the 442,000-square-foot arena, the largest indoor building in the Sacramento region dedicated to sports and entertainment.
Adding to the risks are the increasing competition for the entertainment dollar from the 11,000-seat Raley Field in West Sacramento and the 18,500-seat AutoWest Amphitheatre concert venue near Marysville.
John Thomas, president of Maloof Sports, estimates the amphitheater last year diverted 10 to 12 concerts from Arco, or about $1 million in net income. The sale of about 900,000 tickets each year to see the River Cats, the minor-league baseball team that plays at Raley Field, cuts into walk-up ticket sales for Monarchs games, Maloof officials say, though they have no hard numbers.
"These kinds of venues make the competition greater for the Kings. There are only so many dollars for entertainment and advertising," said Tom Friery, Sacramento city treasurer. Friery meets regularly with Maloof Sports officials to review the franchise's finances, as part of an arrangement set up after the city loaned $73 million to the Kings previous ownership, in 1997, to help restructure the club's debt.
Built in 1988 with $40 million in private financing, Arco lacks fancy restaurants and has about a third of the club boxes and luxury suites of the average NBA arena.
Joe and Gavin Maloof, owners of Maloof Sports, have invested more than $6 million to dress up the arena since they took control of the franchise in July 1999. They also have brought in at least two consultants who came to the same conclusion independently: It is not feasible to remodel Arco or physically possible to add more revenue-producing amenities.
The arena has a no-frills concrete concourse and a cramped commercial kitchen. In some of the restrooms, holes remain where framed advertising signs once hung. The battleship-gray paint at the ticket turnstiles is worn, showing patches of bare concrete.
The building has 30 luxury suites typically leased for three, six or 10 years for up to $200,000 annually. The average yearly rental is about $150,000.
The average NBA arena, by comparison, has 19,500 seats and, more importantly, 84 suites. Chicago's United Center tops the league with 212 suites. Arco ranks 25th out of the 29 NBA teams in terms of suites.
"Teams are looking to maximize their revenues by getting more luxury suites. The ones who are paying the freight are the ones in the suites," said Glenn Wong, a sports law and labor relations professor at the University of Massachusetts, Amherst.
Even with Arco's age and limitations, the Maloofs maintain publicly that they are happy with the arena. Even as the city studies building a $300 million arena in the downtown railyards to spur development, the Maloofs and Thomas say they are focused on trying to make the best of Arco.
"If they don't want it, we're OK here," Joe Maloof said of city officials studying whether to help the Kings pay for a new arena. "We do well here. We're always going to try to improve what we have here at Arco."
Thomas describes Arco's environment as "one of a kind," and says fans haven't complained about the arena's limitations.
"There's some element to human nature that sometimes says the grass is always greener elsewhere," Thomas said. "But the grass is very green right here at Arco. It (a new arena) is not even on our radar screen."
Nevertheless, Maloof Sports joined the city and Union Pacific, which owns the downtown railyards, in splitting the cost of a $150,000 study looking at the feasibility of a new arena downtown. While it would take several years before construction could even begin, a new downtown arena would likely have many of the amenities found in more upscale facilities in the Bay Area.
The Arena in Oakland - home to the NBA's Golden State Warriors - was gutted and rebuilt for $121 million in 1996-97 to contemporary standards. The rebuilt arena features pricey restaurants, a trendy sports bar for club-seat holders only, an Internet cafe and an arena platform for a live band and disc jockey. The arena was expanded to 19,596 cushioned seats for basketball, 72 suites, 1,000 courtside seats and 4,000 sideline club seats.
The Compaq Center in San Jose - home of the Sharks of the National Hockey League - is just five years older than Arco, but cost more than four times as much to build. It features polished brass restroom fixtures, expensive terrazzo tile flooring, carpeting, more than 17,000 cushioned seats, plush private conference rooms, a 475-seat sit-down, order-off-the-menu restaurant and a casual plaza club bar and restaurant. On the upper level, large pantries are used for food storage and prep areas to serve the 65 luxury suites.
Without such revenue-producing amenities at Arco, Maloof Sports focuses on trying to land as many events as possible each year, and to sell as many tickets as possible.
Because the Kings and Monarchs represent about a third of the events held at Arco every year, officials must book regular events such as the circus and ice shows to fill multiple dates and appeal to a broad audience.
In 2001, the arena had 171 events catering to a spectrum of entertainment tastes. The lineup included the World Wrestling Federation, rockers Elton John and Billy Joel, opera star Luciano Pavarotti, religious revivals, a food show, Arenacross motorcycle races and a California State University, Sacramento, graduation.
Eric Cuthertson, assistant director of North American tours for Feld Entertainment, said Sacramento is a good draw for its Disney on Ice and Ringling Brothers shows. Disney on Ice and the circus, which had 26 performances at Arco last year, draw families from as far as Chico, Modesto and Grass Valley.
"We've done very, very well. The economy in Sacramento has been very good in the last couple of years. It's a great venue for us," Cuthertson said.
Vacaville resident Kathy Denham agrees. She has attended concerts, religious events, ice shows, basketball and soccer games and children's programs at the arena. She prefers Arco to Oakland's upscale arena.
"It's so accessible. I like Arco. You have so many different events. It adds to the quality of life of our family," Denham said.
While Maloof Sports officials say they do not break down the revenue each event generates (or even for non-basketball events vs. basketball events), big-name concerts typically draw bigger crowds and more revenue than ice shows and the circus. And the competition for the big concerts has grown fierce in the Sacramento region.
Big-name entertainers prefer to perform at the amphitheater near Marysville rather than Arco because they usually receive bigger fees, said Gary Bongiovanni, editor and chief of Pollstar magazine, a Fresno-based concert trade publication.
The amphitheater is owned by Clear Channel Entertainment, which handles more than two-thirds of the major concert business in the United States.
"Clearly it's more profitable for them (Clear Channel) to play dates in the amphitheater because it's their facility," Bongiovanni said. "They're going to try to steer as many shows as possible into their network of amphitheaters."
Some artists prefer to play indoors because they can control the climate and environment, Bongiovanni said. But in the end, most decisions are dictated by money. And entertainers can make more money if their promoters don't have to pay rental fees at Arco.
To battle the competition, the Maloofs in September gave Mike Duncan, former head of Arco Arena operations, a new job as vice president of arena programming.
With his new assignment, Duncan is assembling a small staff to generate more ticket sales and events.
"If I can sell 500 more seats (for each non-Kings event), it affects our bottom line," Duncan said.
But even that goal won't be easy, Friery said.
"They are more offensive-minded in getting these shows. These guys have to compete harder," the city treasurer said of the Arco efforts.
