Maloof Money & New Arena

F

folsomfella

G-League
I'm constantly telling people the Maloofs can't afford to develop an arena without some outside help. But I realize I don't know if that's true. Does anyone have facts about their financial situation? Could the family build an arena on its own if it wanted to?
 
What I do know about recent Maloof family financial happenings is: 1.) their Wells Fargo stock value plummeted, 2.) they owe a boat load of money for their Palms Casino expansion and overall business is a bit down, 3.) the family has sold L.A./Beverly Hills area homes because of the dropping real estate market, 3.) the family supposedly sold their New Mexico beer distributorship to inject much needed cash into their Palms Resort operation, 4.) as everyone here knows they did away with the WNBA's Monarchs team (maybe someone can chime in if this move was because it was a money losing business; my thought is that it was), 5.) they are into movie and record production (don't know how this is going for the family), 6.) they are investing big time into skateboarding, 7.) they are into banking.

I'm sure they are involved in more ventures and most are doing ok despite the down economy. To answer folsomfella's question regarding if the family is able to build an arena on its own (with their own money) if they wanted I would say NO and its also not feasible for them to do it... even with a zero percent interest construction loan. If they sold their portion of the current Arco arena land to purchase the rail yard lot they'd be short. They also owe the city money on a loan. Then there is the costs of the construction (anywhere from $200 million for a Plain Jane arena to $400 million for a state-of-the-art LEED certified beauty). There's too much exposure.

IMO the city needs to build the thing with some input from their main tenant (the Kings) for design ideas and rent the arena out to the Kings. The city negotiates with the arena name on their own and this money is the city's. The Kings should get a portion of the Kings games parking revenue and 100% of the ticket sales/luxury suites revenue. The Kings should not get anything for concerts, NCAA, Disney, etc, etc. This is another story, lol.
 
Well Paul Allen, all around billionaire and owner of the Portland Trailblazers tried that with the Rose Garden. He regretted a few years later as he was taking huge losses from this. It's not a matter of how rich an owner is, it's the market in which the arena is built. It can be privately done in major markets like LA, NY, etc. Staples was done this way. Just like you and I, we buy a house. We better have enough income to pay the mortgage or you will be in trouble quickly. Well these large markets have enough income from suites sales, media contracts, etc. to pay for their buildings. These numbers dwarf the non-major market cities by a huge margin. If Paul Allen can't handle the losses, then for sure the Maloofs cant.
 
Although they disappeared off the Forbes list of billionaires years ago, the scariest thing right now is probably the huge payment on the Palms they have looming in March... they were supposed to pay $380M last March but didn't have it. They're said to have sold their beer distributorship (which was, historically, the family's foundation) for around $200M to help make that payment. But who knows whether they can cover it all, let alone have anything left over?

http://www.hotel-online.com/News/PR2010_1st/Mar10_PalmsDebt.html

Personally, I'd hate to have a business in Vegas right now. A casino during a recession is a temporary bad thing, but what about the scores of casinos owned by Native American tribes that seem to be springing up everywhere? Not to mention (illegal, but still popular) online gambling. It's gotta be hurting them. Energy costs are a big part of the bills for both transportation and AC, and I can't see those going down significantly in the foreseeable future. It's just not a pretty picture.
 
A precedence has already been set in regards to this issue and it says private/public money is the way to go.
 
Over quite a few years, I've never seen any of the Maloof's on Forbes list of billionaires. Remember the Maloof's wealth is spread over at least 6 people, I'm not sure any one of them has been a billionaire individually, like Paul Allen or even Mark Cuban.

As for Staples, it was built in 1999 when the economy was still hot. It had multiple big corporate sponsors pitching in, one of the two largest media markets in the country, can sell many more luxury suites than would be remotely possible in Sac and three professional sports teams to share one arena and all three with big TV rights contracts. Sacramento has none of those going for it. Also not sure you'd be able to sell asset-backed securitized financing for an arena here, maybe not anywhere right now.

Actually the idea of municipal bonds was floated some years ago for a new arena, which is asset-backed, but it was a no sale with the public. Of course, in Sacramento you could not count so easily on the kind of revenue streams available in a place like Los Angeles.

http://www.staplescenter.com/doublecol.php?section=about&page=news_article&news_id=214

From a 1999 article on Staples:

Bear Stearns announced today that it has sold a $315 million asset-backed securitization financing for STAPLES Center in Los Angeles. The transaction is the largest-ever financing for a professional sports arena and marks the second time that the asset-backed market has been tapped for building a major sports facility in the United States.
Click to expand...
 
It is time for The Maloof Family to Strongly Consider Selling

I really appreciate what the Maloof family has done to resurrect this formally irrelevant franchise. From NBA obscurity to 8 consecutive years making the playoffs on the verge of an NBA Championship in 2002. To international relevance, and on the floor this team is making a comeback.

But they are holding this franchise back right now (not purposely mind you), but they do not anymore have the much needed capital to build privately, neither the political acumen and goodwill to form a public/private partnership. Don't get me wrong they are a wonderful family. But there is a reason why they have not been able to get this done after a decade. In my view it is a combination of:

ECONOMY
BAD LOCAL GOVERNMENT LEADERSHIP
LOCAL GOOD WILL

I know the franchise belongs to them, and they have the right to take it where ever they want to go. But in the next two years because of the limited options, bad economy and potential NBA lockout, where are they going to go. But if they have a heart for this region as they say they do, they will sell the franchise to somebody that can get this done and will promise to keep this team where it belongs THE SACRAMENTO KINGS.
 
Purple Reign said:
I really appreciate what the Maloof family has done to resurrect this formally irrelevant franchise. From NBA obscurity to 8 consecutive years making the playoffs on the verge of an NBA Championship in 2002. To international relevance, and on the floor this team is making a comeback.

But they are holding this franchise back right now (not purposely mind you), but they do not anymore have the much needed capital to build privately, neither the political acumen and goodwill to form a public/private partnership. Don't get me wrong they are a wonderful family. But there is a reason why they have not been able to get this done after a decade. In my view it is a combination of:

ECONOMY
BAD LOCAL GOVERNMENT LEADERSHIP
LOCAL GOOD WILL

I know the franchise belongs to them, and they have the right to take it where ever they want to go. But in the next two years because of the limited options, bad economy and potential NBA lockout, where are they going to go. But if they have a heart for this region as they say they do, they will sell the franchise to somebody that can get this done and will promise to keep this team where it belongs THE SACRAMENTO KINGS.
Click to expand...

And who exactly would that be?

It's easy to float the idea of selling the team. It's much harder to actually find anyone to buy it and keep it in Sacramento.
 
Yeah I would rather see the Maloofs keep owning the team if they can. Despite all the rumors about them being evil and planning to bolt town at the first chance, they have stuck it out here. If they did have plans to buy the team and move, they really suck at planning. They have been here 10 years and still haven't moved.
 
JB_kings said:
Yeah I would rather see the Maloofs keep owning the team if they can. Despite all the rumors about them being evil and planning to bolt town at the first chance, they have stuck it out here. If they did have plans to buy the team and move, they really suck at planning. They have been here 10 years and still haven't moved.
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Indeed! I think we as Sacramentans have grown on them ever since the 2002 WCF's, and yes...they ARE businessmen, but they I think became 'one of us' during our ride to ALMOST glory a few years back. I think they know that they won't get the same fan support anywhere else, TRUE fans like us here in Sacramento. Now, that being said...I think we all know it's the 11th hour, and time is running out and we WILL be hearing from them about relocating if our idiots at city hall dont get their act together, or someone doesnt come up with a miraculous plan...LITERALLY!
 
I can't see another owner keeping the team in town. At this point if the team moves I really can't blame the Maloofs. There's just no reason for them to be in Sacramento out of anything other than loyalty at this point, and frankly it isn't being reciprocated by anyone but those buying tickets, and as well all know those numbers are down for a multitude of reasons. Everyone feared that this team was pulling some stunt like the evil boss woman in Major League but in fact this team is poised to rise from the ashes right now and the family is even trying like mad to drum up interest in this team in the region. I think the building wrap is awesome but back in the day when I lived there that kind of thing would never be necessary with our recent draft luck. If a new owner comes in they are as good as gone in my eye.
 
Selling the team would not solve anything. As far as I know there are almost no NBA owners who can afford to build a new arena all by themselves. Even the Maloofs haven't been able to do that ever, nor could Jim Thompson, who was trying to get a new arena in Sac before the Maloofs bought the majority ownership. The truly sad thin is the arena would have cost so much less 8-10 years ago and the economy being so much better would have made it easier.

Arco is such a cheap built arena, simply because the ownership had to finance it privately, with no public financing. An example of penny-wise and pound foolish for the long term.

If they sell, it will have to be to someone who will move the team to where an arena is already built (like KC) or where they have a guranteed arean in the offing. Anyway you look at it, if Sac can't come up with an arena plan, the Kings are gone, regardless of who owns them.
 
Purple Reign said:
I really appreciate what the Maloof family has done to resurrect this formally irrelevant franchise. From NBA obscurity to 8 consecutive years making the playoffs on the verge of an NBA Championship in 2002. To international relevance, and on the floor this team is making a comeback.

But they are holding this franchise back right now (not purposely mind you), but they do not anymore have the much needed capital to build privately, neither the political acumen and goodwill to form a public/private partnership. Don't get me wrong they are a wonderful family. But there is a reason why they have not been able to get this done after a decade. In my view it is a combination of:

ECONOMY
BAD LOCAL GOVERNMENT LEADERSHIP
LOCAL GOOD WILL

I know the franchise belongs to them, and they have the right to take it where ever they want to go. But in the next two years because of the limited options, bad economy and potential NBA lockout, where are they going to go. But if they have a heart for this region as they say they do, they will sell the franchise to somebody that can get this done and will promise to keep this team where it belongs THE SACRAMENTO KINGS.
Click to expand...

All this would do is guarantee that the Kings moved out of town. Probably would even speed up the process. If you think you are going to find anyone in the Sacramento area with enough money to not only buy the Kings, but also have the money to build a new arena by themselves (as it is looking like they would have to do), then you are delusional.
 
pdxKingsFan said:
Everyone feared that this team was pulling some stunt like the evil boss woman in Major League
Click to expand...

Naah, this is looking like a different movie to me.

semi-pro-photo-one.jpg
 
kennadog said:
Yeah, huge foreclosure problem in LV, and Nevada has 14% unemployment right now and is the third highest state in number of violent crimes. Not good times in our neighbor to the east.
Click to expand...

If you haven't been paying attention to the news the past week the forclosure scene is really going to screw up the economy now. Several major lendors didnt do the forclosure process properly and have opened up thousands of forclosures to lawsuits. They may even be able to get their homes back that people have already purchased.
 
Section 101 said:
If you haven't been paying attention to the news the past week the forclosure scene is really going to screw up the economy now. Several major lendors didnt do the forclosure process properly and have opened up thousands of forclosures to lawsuits. They may even be able to get their homes back that people have already purchased.
Click to expand...
I have been watching that. I work in government financing of housing. Of course, we have had very few foreclosures here in California in our programs and we are doing short sales where we can. There is something to be said for government regulation. We have always followed the same underwriting guidelines.

I could see the current crisis coming at least ten years ago. Private market lenders were setting people up to fail, although even smart people were not making good decisions, always. People just thought the gravy train would never stop. So many are losing so much.
 
folsomfella said:
I'm constantly telling people the Maloofs can't afford to develop an arena without some outside help. But I realize I don't know if that's true. Does anyone have facts about their financial situation? Could the family build an arena on its own if it wanted to?
Click to expand...

With all due respect to your question, I really don't think that's the most important question. What constantly is frustrating to me about this arena discussion is that I haven't heard the one key question: Exactly how much are the Maloofs willing to put into the pot? Using the Arco site, which as I understand it is the least expensive option, what is the maximum amount of dollars they are willing to contribute? Then we could know exactly how much the public or other private investors have to invest to make it work. Maybe this figure has been publicized and I haven't heard it? I dunno. Is there somebody on this board who knows what the number is? If one doesn't know the number then isn't the discussion about having public involvement a frutless one?

As an aside, I realize that the dollars the Maloofs will put up is dependent upon the revenue sources that they would have as part of the deal - parking, concessions, etc.
They are, after all, looking for a return on their money. So assume that they will receive the parking, concessions, etc. they have already asked for, then how much are they willing to put up?
 
Kingster said:
With all due respect to your question, I really don't think that's the most important question. What constantly is frustrating to me about this arena discussion is that I haven't heard the one key question: Exactly how much are the Maloofs willing to put into the pot? Using the Arco site, which as I understand it is the least expensive option, what is the maximum amount of dollars they are willing to contribute? Then we could know exactly how much the public or other private investors have to invest to make it work. Maybe this figure has been publicized and I haven't heard it? I dunno. Is there somebody on this board who knows what the number is? If one doesn't know the number then isn't the discussion about having public involvement a frutless one?

As an aside, I realize that the dollars the Maloofs will put up is dependent upon the revenue sources that they would have as part of the deal - parking, concessions, etc.
They are, after all, looking for a return on their money. So assume that they will receive the parking, concessions, etc. they have already asked for, then how much are they willing to put up?
Click to expand...


In the most recent proposal they agreed to pay 300 million in rent over 30 years. So I would say at least 300 million. 10 million a year seems like a lot of money when you only have 41 nights guaranteed.
 
kupman said:
In the most recent proposal they agreed to pay 300 million in rent over 30 years. So I would say at least 300 million. 10 million a year seems like a lot of money when you only have 41 nights guaranteed.
Click to expand...
Well, I do believe it gave them rights (revenue) to all events at the new arena. Of course, in return they gat all the operational and maintenance costs, too.
 
kupman said:
In the most recent proposal they agreed to pay 300 million in rent over 30 years. So I would say at least 300 million. 10 million a year seems like a lot of money when you only have 41 nights guaranteed.
Click to expand...

Thanks for the info. Is there a link or web site that would have all the details of the proposal?

Regarding the 300 mill over thirty years, if it is in fact a flat $10 mill over 30 years, then the present value (value today) of that is about $95 million, if you use a 6% discount rate
 
What's the next step?

It seems to me that extending this period where the City can negotiate only with Kamilos/Taylor would be a dangerous move. That's throwing all your eggs in a basket that isn't very sturdy. Going with a two-way land-swap is almost as complex as the Convergence.

And yes, I recognize that involving the Legislature was always a long shot. But this shot is almost as long. If it has been proven that I can't throw a football accurately 40 yards, does that mean the coach should limit me to 38?

So what's the next move? Extend the rights of exclusive negotiations? Because I'm convinced the two-way has about much chance of success as Q&R did.

By the way, after reading the Seattle fan open letter and posts here on the Maloof finances, I am 100% convinced that the NBA has decided it's downtown or nothing. I think an alternative city has already been selected, as a precaution by the NBA. Proceed with plans at Arco at your own peril. On Oct 25, if the Council decides to look more seriously at building an arena on the baseball foundation site, you can turn out the lights.

Suppose the City extends for 90 days. That gives the Maloofs plenty of time to file their relocation papers should those negotiations fail, but not enough time for the City to formulate an alternative. We'd know the fate of the team by the end of January; it'd be written in stone. Because the end of January to the first of March isn't enough time to put together a plan B. That's where I think the risk is.
 
Alternative city has already ben selected? Really? All of the other names bandied about have serious warts, and I've yet to hear a convincing reason why one is particularly feasible. No reason to be complacent, obviously, but no reason to panic yet either.
 
Arena Skeptic said:
It seems to me that extending this period where the City can negotiate only with Kamilos/Taylor would be a dangerous move. That's throwing all your eggs in a basket that isn't very sturdy. Going with a two-way land-swap is almost as complex as the Convergence.

And yes, I recognize that involving the Legislature was always a long shot. But this shot is almost as long. If it has been proven that I can't throw a football accurately 40 yards, does that mean the coach should limit me to 38?

So what's the next move? Extend the rights of exclusive negotiations? Because I'm convinced the two-way has about much chance of success as Q&R did.

By the way, after reading the Seattle fan open letter and posts here on the Maloof finances, I am 100% convinced that the NBA has decided it's downtown or nothing. I think an alternative city has already been selected, as a precaution by the NBA. Proceed with plans at Arco at your own peril. On Oct 25, if the Council decides to look more seriously at building an arena on the baseball foundation site, you can turn out the lights.

Suppose the City extends for 90 days. That gives the Maloofs plenty of time to file their relocation papers should those negotiations fail, but not enough time for the City to formulate an alternative. We'd know the fate of the team by the end of January; it'd be written in stone. Because the end of January to the first of March isn't enough time to put together a plan B. That's where I think the risk is.
Click to expand...
Good grief. What a load of pure speculation. Which no one needs right now. Read the threads on what KJ said on 1140 about an extension. You'll be enlightened.
 
And please help me to understand how Seattle has been pre-chosen when they have a huge arena question of their own? The NBA had just as much trouble getting the Sonics a new arena as they do in Sacramento. Did you notice the Sonics moved to OKC because Howard Schultz was fed up with trying to get a new building and sold to Clay Bennett who poorly hid his intention to keep the Sonics in Seattle. What has changed in Seattle that they are now so willing to replace outdated Key Arena? Answer: nothing.
 
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