Maybe the Natomas site will be leased to someone else by the city. Don't know. The problem for the Arean ownership is that if the land is actually given over to the city, it will be viewed as a sale and comes with possible capital gains repercussions for them. Of course, maybe with the market so down, it won't have much of an impact. If so the city could sell all the Natomas land to repay the bond loan, maybe? I'd have to look at numbers if they are available.
Yes, it was a huge benefit to Sacramento to see the lease arragment in Anaheim. Samueli's deal with the Maloofs didn't give them much of the arena revenue streams either. I was shocked at what a small share of revenues they were going to get there and yet they accepted it.
The questions will be how competitive the team can be with reduced revenues. That was a problem for the team before the 1997 city loan and part of the understanding, at that time, is the monetary reduction in debt service on the arena would allow the arena owner to contribute more money to the team ownership. (Yes, there was and is two separate ownership entities).
Captain. I think they are counting hard construction costs and the soft costs that would include construction loan interest. The lease payment amount is stated in terms of today's dollars. Maybe they haven't taken into account some kind of indexed annual increase in that amount. I haven't read the Nexus report yet, but I would think it has a 30-year cash flow pro forma. Although any pro forma will change depending on what is actually negotiated.
We pay a ticket surcharge now of $1 to $2 dollars per ticket dependent on the cost of the ticket, so it's not like that's new. The Maloofs can set their ticket prices at what they think the market will bear and what they need, then the surcharge is added on top of that. They don't lose revenue in that scenario, unless they can't make enough money on their tickets. That's a whole other issue. The surcharge money was never their money in the first place.
I can see some stumbling blocks that naysayers could come up with. I won't discuss them here. But everything selected is not a tax on the general citizens. Hotel taxes should almost never affect locals. Food and beverage tax on a downtown district would affect anybody who dines or drinks in the area, which anyone can choose not to do. You don't have to pay ticket surcharges, unless you want to see an event at the new arena. By the way, back at the time surcharges were added to tickets sold for arena events in 1997, the court already had handed down a decision in a lawsuit that those were not "taxes."
Also, it's not true that other teams that are lessee's in city-owned arenas get all the revenue streams. The benefit to the owners as lessee's is they are no longer responsible for all the
considerable costs of operating an arena, nor are they responsible for repairs, replacement and long-term capital needs expenses. They pay rent and they can spend all the money they do make on the team, not on the team
and arena needs.
Considering that Arco was building up more and more deferred maintenance, it was probably getting way too expensive to maintain. Making any major investments in the building would have been a ridiculous waste of money anyway for two reason. Property values have declined so much, making improvments to real property a waste of money, unless you plan to stay in the place for a very long time. Secondly, it could not ever be remodeled to NBA standards, so it would be pouring good money after bad at this point.
Gotta run. Sorry fo typos. I'm a terrible typist.
