Houston and San Antonio had similar situations

[VF21]

We aren't the first fanbase to face the trauma of worrying about losing our team.

Here are a couple of articles that show what happened in Houston and San Antonio before their new arenas were built:

http://www.stp.uh.edu/vol65/110/sports/sports3.html

March 7, 2000
Opportunity to help keep Rockets in town is at www.saveourrockets.com

Sports Opinion by Rohith Nandagiri

I have often said that the two of the happiest moments of my life happened inside that little building on Edloe.

The Summit, as it was called before being renamed Compaq Center, was home to some of the best moments for a lot of people.

For me, it was when I graduated from high school in The Summit and later when the Houston Rockets defeated the Orlando Magic in game four of the NBA Finals for their second consecutive championship. These events happened about a month apart.

But there is a chance we may lose the Rockets. Dreams of another world championship are about to vanish if the Rockets cannot get an arena referendum passed. The first referendum was shot down by the voters by a wide margin.

Now a new effort has begun by the Rockets and the Houston Sports Authority to put another arena deal on the table. But apart from that, a loyal band of Rockets supporters have taken to the Internet to pledge their undying devotion to a team which has given us so much to be thankful for.

The Web site is www.saveourrockets.com and it was founded in February by a couple of people. One of them is Jeff Balke, a UH graduate who took the initiative to do the work and literally save our Rockets.

Balke, a journalism major, has gotten more publicity than he could have imagined.

"In the first month alone we had 80,000 hits," Balke said. "We have had a lot of out-of-town people e-mail me and hundreds of e-mails requesting the chance to volunteer."

The Web site has no affiliation with the Rockets or the city of Houston, which makes this effort all the more remarkable. It proves that fans do have an impact on professional sports teams and that teams need fan support. There is no doubt in my mind that Balke and his staff could be looked upon as heroes in a few years.

Their first task to execute an exit poll next Tuesday during the primaries. They need about 50 volunteers and anyone can help. You can reach the staff at (713) 880-3733 and you can access the e-mail address on the Web site. They are requesting help from all the Universities in the state. It would be nice to have a contingent from the University which produced the best player to ever wear a Rockets jersey -- Hakeem Olajuwon.

The inception of the fan-site is interesting. Balke writes for the Rockets' fan-site, Clutchcity.net. He wrote a column admonishing Rockets' fans for not doing more to help the team stay here. But he felt a bit hypocritical saying this and not doing anything himself. So he created saveourrockets.com.

"The people of Houston are enormously caring. They just needed something to get behind like this," said Balke. "The biggest issue is education of the voters on the issues and getting people to vote."

There might be a vote on the new referendum sometime this year. The Rockets and the sports authority met last week to iron out some details on what would be part of this new deal.

Last time, Rockets owner Les Alexander put up an unheard amount of his own money. He was willing to put in from $60 million to $100 million of his own money on the new arena. Very few other cities with new arenas had that to work with.

With other cities courting the Rockets, Houston may not get another shot at this. It is time to look at the facts and vote responsibly. But the first thing to do is visit the Web site at www.saveourrockets.com.

 

[VF21]

And about the Spurs (this is from the archives of the San Antonio Express-News and you cannot access it via a link):

Spurs' future hangs in balance
Johnny Ludden Express-News Staff Writer
Publication Date : October 31, 1999

Since he first suited up for the Spurs in 1989, David Robinson has played with 91 different teammates, worked under seven head coaches, and been employed by three different ownership groups. Besides its All-Star center, the NBA franchise's only other constant for the past decade has been its hometown.
Now, Robinson wonders if that, too, could change.

"I think the Spurs have been good for San Antonio," Robinson said, "but if the people don't think so, there's not a lot you can do.

"This is a business, and the business will continue to go on."

Two days before the election for a new multipurpose arena, the $175 million question remains: Are Bexar County voters being asked to decide the fate of a facility or that of the Spurs franchise itself?

The referendum calls for the county to increase hotel-occupancy and car-rental taxes to help fund an arena next to Freeman Coliseum. The Spurs will contribute $28.5 million toward the facility's construction besides paying the county $1.3 million annually to lease the arena for 25 years, plus any construction cost overruns.

The election has shaped up as a high-stakes game of chicken between the arena plan's supporters and opponents.

Publicly, Spurs officials say they want to keep the NBA team in San Antonio, but that they will no longer negotiate if Tuesday's vote does not pass. The opposition group, Citizens for Responsible Spending, says the "nonthreat" threat of the Spurs moving is merely a campaign strategy.

"The Spurs are not going to leave town," said Dennis Miller, general manger of the Holiday Inn-River Walk and a member of Citizens for Responsible Spending. "We're absolutely convinced the Spurs aren't going anywhere. There are other ways to do this."

But several sources within the Spurs organization and the NBA believe if voters reject the plan, the franchise might indeed relocate, perhaps as soon as next season.

Two sources - a high-level Spurs official and a prominent NBA insider - say the team already has told star forward Tim Duncan that if the referendum fails and the franchise moves, Duncan will have input in selecting the new city.

If the vote fails, according to one source, Spurs Chairman Peter Holt would like to retain ownership and try to move the team himself instead of selling to an outside group.

In keeping with his campaign strategy, Holt would not discuss the possibility of the Spurs relocating, saying only that he and his wife, Julianna, intend to remain NBA owners.

"Our goal is to stay here," Holt said. "And we've said all along that we need a new arena to stay competitive. Our plan is to win Nov. 2. I'm cautiously optimistic."

Holt did say Friday night he would want to increase his stake in the team if the vote passes, "but only if ownership wants to sell."

Some of the franchise's minority investors have reportedly become disenchanted with the team's operating losses and the prospect of facing further losses for a few years after a new arena opens.

Andrew Zimbalist, a sports economics professor at Smith College in Massachusetts, said Friday the team's claim that it lost $12 million last year in a lockout-shortened season is "implausible."

"I know there are a lot of those owners who want to sell," regardless of the outcome of Tuesday's election, said Gary Woods, who was Spurs president under former owner B.J. "Red" McCombs.

"Who wants to be a minority owner of a sports team?" Woods asked. "You might as well own shares of IBM."

Holt owns about 32 percent of the franchise, but has an option to buy another 5 percent any time at his original purchase price. With a two-thirds majority needed to move or sell the team, Holt could successfully block any vote by purchasing the extra 5 percent.

The Spurs' Alamodome lease makes them an attractive commodity to other cities and potential ownership groups. The team must give only a 90-day notice before moving and is not subject to a financial penalty. The lease on the proposed arena would force the Spurs, if they were to move, to pay a fine that starts at $250 million and decreases by $6 million each year of the 25-year term.

New Orleans Mayor Marc Morial announced Tuesday that he would like to pursue the Spurs for that city's new arena. Holt said groups in four or five cities have contacted him. One San Antonio official believes the team has "at least three firm offers" and listed Anaheim, Calif., Baltimore and San Diego as bigger threats than New Orleans.

No NBA team has relocated since the Kings moved from Kansas City to Sacramento before the 1985-86 season.

But one arena foe thinks the Spurs are bluffing in hinting they might move if the arena issue fails.

"I think if you read the NBA handbook on how to coerce the local citizens into building an arena, it's, 'Don't tell them there is a Plan A, Plan B or Plan C,'" said Miller of Citizens for Responsible Spending. "But we know there are other ways to do this.

"We know there's private financing. We know there's selling shares to the public. We know the Alamodome can be reconfigured.

"We need to be the tough negotiators if the county isn't. ...We know the Spurs aren't going to leave. We just want to drive them back to the negotiating table."

Although the NBA's new collective-bargaining agreement has helped limit player salaries, McCombs said the small-market Spurs need a new facility to survive, because the league's salary cap is determined by the combined basketball-related income of all of its teams.

"Teams have got to operate within the league's parameters," he said. "You can't be an island unto yourself. The better the facilities the other teams have, the higher your revenue better be.

"I don't see where the league would allow (the Spurs) to continue. If they can't operate under the same structure as everyone else, something has to give."

After today's deadline to sign an extension with the Spurs, Duncan can negotiate with any team beginning July 1. But there won't be a bidding war.

Only the Spurs can offer him the top salary - about $70 million over six years - which is less than half of what he likely would have gotten under the NBA's old collective-bargaining agreement.

Like most of his teammates, Duncan has tried to distance himself from the election, saying that regardless of Tuesday's outcome, he will not decide whether to re-sign with the Spurs until after the season.

Other than Duncan, few, if any, of the current Spurs will be around to play in the new arena, which would be built in time for the 2002-03 season.

Even players with established roots in the city say they will simply move if the team relocates. But for now, point guard Avery Johnson is not considering the idea.

"My whole thing since I've been here is, if you have an asset, keep it. ... If it's a liability, get rid of it," Johnson said. "But I've never looked at the Spurs as being a liability."

 

[VF21]

This Spurs article is also from the archives of the San Antonio Express-News:

When the Spurs leave: Believe it
by Buck Harvey
Publication Date : October 17, 1999

I believe that the arena proposal will fail.
That this season will be the Spurs' last in San Antonio.

That, within a few years, we will look at what's left behind and wonder what we were thinking. We will then live in the worst sports town in America, and we will understand why other cities value their franchises. We will miss the entertainment, the sense of community, even the remote-throwing anger a loss could bring.

That when voters say the Spurs are greedy and rich, they don't grasp the economics. This was never about San Antonio negotiating against the Spurs, but rather San Antonio negotiating against other cities.

That New Orleans or San Diego will not ask the Spurs to invest a dime.

That the reality of that marketplace changes everything, including charges about a "sweetheart" deal.

That it's supposed to be a sweetheart deal. When bidding against what other cities could offer, how much hardball could Bexar County play?

That when people say they want the Spurs to be treated as if they were any other business, they don't see the flip side to their argument.

That if Peter Holt treated the Spurs as if they were any other business, he would have moved them long ago.

That New Orleans or San Diego will not call Holt greedy, but rather a savior.

That when the Spurs agreed to a virtual no-leave clause, they took away their out, as well as a onetime argument against the arena. Remember those who said the NBA couldn't remain here even with the proper venue?

That teams in Houston and Dallas invested more in their arenas for a reason. Simply, they are in Houston and Dallas. They had less leverage. They didn't want to leave the best markets. Frankly, a better question is why the cities of Houston and Dallas used their own hotel and rental-car taxes when each had such leverage?

That the tourist industry is casually disingenuous when it says this isn't a good deal and the Spurs should be sent back to carve out another. There are no other votes, no other TIFs, no other fallback plans.

That the Spurs have their own understanding of what "no" means. "N.O." stands for New Orleans.

That, when the vote fails, Holt's instinct is to keep the franchise and move to another city, rather than selling. He likes owning a team, and he likes the deals that will be there for him Nov. 3. If he acts quickly enough, he could perhaps sell Tim Duncan on relocation.

That the NBA won't want its champions to relocate, but won't get in the way.

That America will be stunned when the Spurs leave. The 11th largest market, Houston, spent a few years on its knees pleading for NFL expansion. And yet San Antonio let its only franchise go without any hope of another coming in its place?

That this is not only San Antonio's one chance to build an arena with the Spurs, but also the city's one chance to build an arena. Without a partner and a tenant, how or why would one get built?

That San Antonio should get ready to live with the facilities it has.

That San Antonio without the Spurs cannot be compared to Austin and other cities without major-league sports. Austin has UT. Waco has Baylor. Manhattan, Kan., has Kansas State. San Antonio would have what?

That the tourist industry will also miss the Spurs. Didn't the Spurs spend the past week in Milan being broadcast to more than 100 countries around the world?

That everything came together for a South Texas market that never should have had a major-league team. But lottery miracles, an NBA labor agreement, a championship and a local owner weren't enough.

I believe, also, we will regret this.

 

[VF21]

Definitely food for thought...

Much like San Antonio, without the Kings what would Sacramento have? And look at San Antonio now. Their new arena complex is a jewel in their crown.

Wouldn't it be nice if something similar could happen here?

Hey, Heather Fargo? Hey, all you people with the title City Councilmember? GET OFF YOUR BEHINDS and get something going!!!! If the Kings leave, I promise to start a movement to keep that 6 and have YOUR names engraved on it as the people who shafted the fans and the town of Sacramento and drove the Kings away...and took Sacramento off the map as a place where top concert artists, various sporting exhibitions, etc. wanted to come because the city leaders were too stubborn and too short-sighted to see the need for a new arena was MORE than just for the Kings.

 

[kennadog]

AMEN Sister!

 

[VF21]

I've bumped this because I think it's important we learn from the lessons of Houston and San Antonio.

 

[Thinker?]

The Oilers left Houston and became the Titans because of a stadium deal. As we all know, Houston then built a new stadium and paid hundreds of millions of dollars to get an expansion franchise. Since then the Titans have had significant success and the Texans suck pretty bad.

Building the stadium back when they had the Oilers would have saved them hundreds of millions (difference in construction costs over the years and the franchise fees). Additionally, they would have saved the heritage of the Oiler connection to Houston.

So, yes, teams will leave and you will have nothing, or even worse pay hundreds of millions to get back just some of what you let walk away.

 

[BigWaxer]

I missed this in FEB when you posted them. WOW that first Spurs article is very interesting...

Seems pretty close to our situation as we are hearing some of the same.

 

[Circa_1985_Fan]

Definitely food for thought...

Much like San Antonio, without the Kings what would Sacramento have? And look at San Antonio now. Their new arena complex is a jewel in their crown.

Wouldn't it be nice if something similar could happen here?

Hey, Heather Fargo? Hey, all you people with the title City Councilmember? GET OFF YOUR BEHINDS and get something going!!!! If the Kings leave, I promise to start a movement to keep that 6 and have YOUR names engraved on it as the people who shafted the fans and the town of Sacramento and drove the Kings away...and took Sacramento off the map as a place where top concert artists, various sporting exhibitions, etc. wanted to come because the city leaders were too stubborn and too short-sighted to see the need for a new arena was MORE than just for the Kings.

Thank you, VF. I, as a Sacramentan, born and raised a Kings fan since the age of 10 in 1985, promise to scorn the names of all those responsible, if the Kings leave. I will NEVER support an expansion team, or any OTHER NBA team not named the KINGS in Sacramento. ITS TIME PEOPLE!!

 

[1kingzfan]

"Two days before the election for a new multipurpose arena, the $175 million question remains: Are Bexar County voters being asked to decide the fate of a facility or that of the Spurs franchise itself?

The referendum calls for the county to increase hotel-occupancy and car-rental taxes to help fund an arena next to Freeman Coliseum. The Spurs will contribute $28.5 million toward the facility's construction besides paying the county $1.3 million annually to lease the arena for 25 years, plus any construction cost overruns.

I finally got around to reading the Houston and San Antonio articles, and they are very enlightening and remarkably parallel to where we stand now with our new arena tax proposal headed to the voters in November.

I thought the above excerpt was worth repeating for those that might not take the time to read these pieces. This is the basic financial deal for San Antonio's new arena.

The Spurs' contribution? $28.5M + ($1.3M x 25Y) = $60.0M

% of arena construction funded by Spurs = 60/175 = 34%

Plus the Spurs were on the line for construction overruns. I assume the Spurs had some management authority for construction management.

Comparing that to the deal before us in SACTown now:

The Kings contribution? $20.0M + ($4.07M avg x 30Y) = $142.0M

% of arena construction funded by Kings = 142/470-542 = 30%-26%

The City is on the line for construction overruns. The City is solely responsible for construction management.

The Maloofs must also pay back a $70+ million loan very early and can probably get around 60% of that payoff by selling the 85 acres of Arco (assuming $500K per acre) and its surrounds. That's an estimated net $28M out of the Maloofs' pocketbooks, but it's a debt they had already incurred. They lose significant time value of money, but this simple analysis does not include translating future payments into present worth dollars.

Are these particular two deals comparable?

I would say so, even though the new downtown facilty in SAC is expected to cost over 2-1/2 times that of the San Antonio arena, so there's a lot more bucks involved for both sides. The SA deal also involved increasing the rental car and hotel taxes, rather than sales tax.

This is but one, single, comparable data point for consideration by the public, but by itself does not allow a determination whether or not our elected leaders negotiated a reasonable deal.

 

[Kingsgurl]

That when voters say the Spurs are greedy and rich, they don't grasp the economics. This was never about San Antonio negotiating against the Spurs, but rather San Antonio negotiating against other cities.

That New Orleans or San Diego will not ask the Spurs to invest a dime.

That the reality of that marketplace changes everything, including charges about a "sweetheart" deal.

That it's supposed to be a sweetheart deal. When bidding against what other cities could offer, how much hardball could Bexar County play?

I thought this was pretty germane.

 

[JB_kings]

I thought this was pretty germane.

Germane? I think it's way beyond that.
I wish everyone would realize this. I swear some people think this is like negotiating with a car salesman.

 

[1kingzfan]

As has been posted elsewhere, the landscape for negotiations is, in part, dictated by what competitors are willing to offer.

That leaves a sour taste in some folks' mouths, and they will always and forever question "why not a better deal?", but it is the reality of the business world. Hungrier businesses will cut prices/offer better deals to steal work (or NBA teams ) from competitors. This HAS to be considered at the table when deals are being discussed, and smart businesses use it as leverage to get the best, most profitable deal for themselves.

Has anyone here ever been in the market to purchase a new car and secured prices from two dealers, then proceeded to share the lower "bid" with the high bidder, etc, etc, to make them compete with one another to get the lowest price possible?

Aha...I thought so.

So actually it IS like dealing with car salesmen...for the Maloofs.

 

[uolj]

A common anti-arena sentiment is that the Kings don't need a new arena, Arco is fine. Another is that the deal is too good for the Maloofs compared to what the city/county is getting out of it. The usual response to those is that based on today's NBA standards Arco does need to be replaced, and that other cities are prepared to offer similar (or better) deals that will take the Kings away so the deal has to be a good one for the Kings ownership.

I think many people would rather let the Kings go than acquiesce to the high price that the NBA market requires of a city to keep their franchise. In that case I don't think there much that can be said to counter that opinion. The NBA might just cost more than Sacramento residents are willing pay.

 

[VF21]

A common anti-arena sentiment is that the Kings don't need a new arena, Arco is fine. Another is that the deal is too good for the Maloofs compared to what the city/county is getting out of it. The usual response to those is that based on today's NBA standards Arco does need to be replaced, and that other cities are prepared to offer similar (or better) deals that will take the Kings away so the deal has to be a good one for the Kings ownership.

I think many people would rather let the Kings go than acquiesce to the high price that the NBA market requires of a city to keep their franchise. In that case I don't think there much that can be said to counter that opinion. The NBA might just cost more than Sacramento residents are willing pay.

That's not quite accurate, IMHO.

We're not competing with the NBA here.

I think a more accurate assessment might be that Sacramento residents aren't willing to pay as much as other cities to be an NBA market.

Forgive me for being blunt - and I'm speaking in general terms only here - but that kind of lack of community pride and small-mindedness makes me want to hurl.

My family moved to Sacramento in 1951. I have watched as it grew from a small city to a blooming metropolis. People really need to quit thinking they're going to stop progress if they vote down proposals like this. They are truly cutting off their noses to spite their faces.

Sacramento is the capital of a state with the 5th to 8th largest economy IN THE WORLD. (Figures vary and I don't think it matters that much to my argument to take the time to find out what it is currently.)

Sacramento NEEDS a state-of-the-art entertainment venue for a wide variety of events. Sacramento is on the map partially because of our NBA and WNBA franchises. This has been good for the city, good for the area and good for the Maloofs.

Why is it okay for the first two and yet somehow bad for the last?

I hope 51% of the voters are able to see the long-term benefits of this proposal, not only for the new arena but for all the other things that will derive from this measure. It's NOT just about the arena.

 

[uolj]

That's not quite accurate, IMHO.

We're not competing with the NBA here.

I think a more accurate assessment might be that Sacramento residents aren't willing to pay as much as other cities to be an NBA market.

I think you've got it right. That is basically what I said and exactly what I meant.