Right now it does not matter what city the Kings call home and it does not matter how nice the arena is. The Maloofs will continue to lose money if they continue to put a terrible product on the court. The Maloofs know this. They also know that Sacramento is a wonderful city to support the team - great fans and the only game in town.
At some point in the near future a new arena will be needed. For the Maloofs and even more for the citizens of Sacramento.
Not really true is all cities, at all times. The only times the Kings haven't sucked in Sacramento is under the Maloofs and yet the longest sell-out streak in Sacramento predates the Maloofs ownership.
The Knicks sucked for many years and still aren't great, but it's a big enough market to allow a crappy team to keep going. Think the Knicks will ever leave NY? The Bulls stunk for a long time, but Chicago is not in danger of losing their Bulls. San Diego did lose their Clippers, but they seem to keep going in LA, despite their crappiness.
In reality, all teams go through down times. Fans need to accept this. The problem is that in small markets, there isn't enough money in TV contracts and corporate sponsorships to help offset poor attendence.
For Sacramento you add in the fact that Arco is verging on economic obsolescence. Meaning revenue from other events is falling off as some events can't afford to come to Arco anymore or physically can't come to Arco. Those other events are as important to keeping the Kings as selling tickets to basketball games. Heck, there are nicer college arenas than Arco. Arco is a dump. It's not a very attractive or comfortable venue to see anything.
It's actually a rather vicious problem. Small markets have trouble making money and it's hard to maintain a really top level team without paying out the money. Add to that the fact that the Maloofs aren't as rich as many other owners like Cuban or Paul Allen and it gets even less viable. (Cuban and Allen are on Forbes top 500 billionaires list. No Maloof is, last time I looked.)