http://www.sacbee.com/content/news/arena/story/14290765p-15124151c.html
Subsidy for Kings would set new standard
By Daniel Weintraub -- Bee Columnist
Published 12:01 am PDT Tuesday, August 8, 2006
The public officials promoting a new taxpayer-financed arena for the NBA's Sacramento Kings have suggested that the deal they struck with the team's owners is typical for professional basketball today, with the public paying to build the venue and the team contributing very little while standing to reap extensive profits from the relationship.
But the agreement that Sacramento County voters will weigh in November isn't quite in the mainstream yet, even for the NBA. It's more like the cutting edge in subsidies, the latest extension of the long-term trend in taxpayer support for the private owners of professional sports franchises.
If the voters agree to a quarter-cent increase in the sales tax, a new arena projected to cost about $500 million would be built, presumably in downtown Sacramento. The Kings would contribute $20 million upfront and about $4 million a year for 30 years. The team's participation, using commonly accepted accounting principles, would amount to about 12 percent.
That's a little bit less than the 14 percent that the private sector is expected to contribute as part of a deal between the Memphis Grizzlies and the city of Memphis and Shelby County, Tenn., for what is now FedEx Arena. That $250 million building was financed with a combination of city, county and state appropriations, plus car rental and hotel taxes. The team's owners will manage the arena and pay the public a $1.15 per seat fee on every ticket sold to any arena event.
But there is also a key difference between the situation in Memphis and the one in Sacramento. Memphis had no basketball team at the time and was trying to lure one from out of town. The deal was put together to draw the then-Vancouver Grizzlies from Canada to Tennessee.
The Kings, however, have been in Sacramento since 1985, have invested millions in building their brand loyalty here and are the only major league franchise in the region. It would make sense for them to stay.
That's why the agreement that built a new arena for the San Antonio Spurs might be a more apt comparison.
In an arena feasibility study prepared for the city of Sacramento in 2002, Memphis was ranked as the city most similar to Sacramento because of its population, personal spending and corporate business climate. But among places that already had a team when they built a new arena, San Antonio was the region most like Sacramento.
At the time, the Sacramento market within 30 miles of the arena had a population of about 1.7 million. San Antonio's population was 1.6 million.
The average household income in Sacramento was about $63,000. In San Antonio it was $55,000.
Sacramento had 515 businesses with annual sales between $10 million and $100 million. San Antonio had 527 such businesses.
The biggest differences were in the number of larger corporations -- Sacramento had 70, San Antonio 129 -- and the per capita retail spending of the region's residents. In Sacramento, the average person spent $8,000 per year. In San Antonio, it was about $12,000.
In November 2000 the voters of Bexar County, Texas, approved a deal to build a new arena for the Spurs, a year after the team won the first of its three league championships. The public's portion of the building was paid for with a tax on rental cars and hotel rooms. The team's owners agreed to contribute, over time, an amount equivalent to about 30 percent of the cost of the project.
That's a private investment more than twice as large as the Kings were willing to make in a new arena under the Sacramento deal. But the Spurs also agreed to assume responsibility for any cost overruns, a burden the public would bear in the Sacramento agreement. In San Antonio, those extra costs added another $15 million to the project, all of which was absorbed by the team's owners.
The best recent deal for an NBA team not relocating to another city was for the Indianapolis Pacers, although the authors of the Sacramento feasibility study suggested that the Indiana city was not really comparable, in a demographic and economic sense, to Sacramento. That team's owners will pay an estimated 15 percent of the project cost over 20 years. Measured in the same way over 20 years, the Kings' contribution to the Sacramento deal would be about 10 percent.
So if San Antonio and Indianapolis are the range for the state of the art in public subsidies for retaining an NBA team, Sacramento would be not just keeping up but breaking new ground.
It's true that in the league's relatively smaller markets, unlike in the major cities, the trend has been moving toward bigger subsidies for some time. The owners of the Utah Jazz, who paid most of the cost for building their new arena in 1990, were the last small-market team to do so. Since then, using the direct or veiled threat of leaving town, basketball teams have been able to win bigger and bigger public subsidies from their communities.
The level of taxpayer support for the new Kings arena, measured as a percentage of the cost of the building, would probably set a new standard.
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I wrote a partial response comment. Once again he is only mentioning the "accounting" that makes it look bad; posts different contribution percentages than his own paper published just recently and completely leaves out the most comparable and most recent arena deal (Charlotte), because it wouldn't support his point of view so well. I hate opinion masquerading as true, unbiased facts.
Subsidy for Kings would set new standard
By Daniel Weintraub -- Bee Columnist
Published 12:01 am PDT Tuesday, August 8, 2006
The public officials promoting a new taxpayer-financed arena for the NBA's Sacramento Kings have suggested that the deal they struck with the team's owners is typical for professional basketball today, with the public paying to build the venue and the team contributing very little while standing to reap extensive profits from the relationship.
But the agreement that Sacramento County voters will weigh in November isn't quite in the mainstream yet, even for the NBA. It's more like the cutting edge in subsidies, the latest extension of the long-term trend in taxpayer support for the private owners of professional sports franchises.
If the voters agree to a quarter-cent increase in the sales tax, a new arena projected to cost about $500 million would be built, presumably in downtown Sacramento. The Kings would contribute $20 million upfront and about $4 million a year for 30 years. The team's participation, using commonly accepted accounting principles, would amount to about 12 percent.
That's a little bit less than the 14 percent that the private sector is expected to contribute as part of a deal between the Memphis Grizzlies and the city of Memphis and Shelby County, Tenn., for what is now FedEx Arena. That $250 million building was financed with a combination of city, county and state appropriations, plus car rental and hotel taxes. The team's owners will manage the arena and pay the public a $1.15 per seat fee on every ticket sold to any arena event.
But there is also a key difference between the situation in Memphis and the one in Sacramento. Memphis had no basketball team at the time and was trying to lure one from out of town. The deal was put together to draw the then-Vancouver Grizzlies from Canada to Tennessee.
The Kings, however, have been in Sacramento since 1985, have invested millions in building their brand loyalty here and are the only major league franchise in the region. It would make sense for them to stay.
That's why the agreement that built a new arena for the San Antonio Spurs might be a more apt comparison.
In an arena feasibility study prepared for the city of Sacramento in 2002, Memphis was ranked as the city most similar to Sacramento because of its population, personal spending and corporate business climate. But among places that already had a team when they built a new arena, San Antonio was the region most like Sacramento.
At the time, the Sacramento market within 30 miles of the arena had a population of about 1.7 million. San Antonio's population was 1.6 million.
The average household income in Sacramento was about $63,000. In San Antonio it was $55,000.
Sacramento had 515 businesses with annual sales between $10 million and $100 million. San Antonio had 527 such businesses.
The biggest differences were in the number of larger corporations -- Sacramento had 70, San Antonio 129 -- and the per capita retail spending of the region's residents. In Sacramento, the average person spent $8,000 per year. In San Antonio, it was about $12,000.
In November 2000 the voters of Bexar County, Texas, approved a deal to build a new arena for the Spurs, a year after the team won the first of its three league championships. The public's portion of the building was paid for with a tax on rental cars and hotel rooms. The team's owners agreed to contribute, over time, an amount equivalent to about 30 percent of the cost of the project.
That's a private investment more than twice as large as the Kings were willing to make in a new arena under the Sacramento deal. But the Spurs also agreed to assume responsibility for any cost overruns, a burden the public would bear in the Sacramento agreement. In San Antonio, those extra costs added another $15 million to the project, all of which was absorbed by the team's owners.
The best recent deal for an NBA team not relocating to another city was for the Indianapolis Pacers, although the authors of the Sacramento feasibility study suggested that the Indiana city was not really comparable, in a demographic and economic sense, to Sacramento. That team's owners will pay an estimated 15 percent of the project cost over 20 years. Measured in the same way over 20 years, the Kings' contribution to the Sacramento deal would be about 10 percent.
So if San Antonio and Indianapolis are the range for the state of the art in public subsidies for retaining an NBA team, Sacramento would be not just keeping up but breaking new ground.
It's true that in the league's relatively smaller markets, unlike in the major cities, the trend has been moving toward bigger subsidies for some time. The owners of the Utah Jazz, who paid most of the cost for building their new arena in 1990, were the last small-market team to do so. Since then, using the direct or veiled threat of leaving town, basketball teams have been able to win bigger and bigger public subsidies from their communities.
The level of taxpayer support for the new Kings arena, measured as a percentage of the cost of the building, would probably set a new standard.
------------------------------------------------------------------------
I wrote a partial response comment. Once again he is only mentioning the "accounting" that makes it look bad; posts different contribution percentages than his own paper published just recently and completely leaves out the most comparable and most recent arena deal (Charlotte), because it wouldn't support his point of view so well. I hate opinion masquerading as true, unbiased facts.
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