Well, it's over. Get your goodbyes ready
- Thread starter folsomfella
- Start date
Circa_1985_Fan
All-Star
I was REALLY thinking hard about this the past week or so...but wonder if anything can be done at this point. It's not like West Sac has a ton of money either, and I doubt their votors would approve anything to finance a new arena, unless they were to put 'West' in front of Sacramento on the name...and even then it would still be a longshot. My hope is dwindling...
Trueblood
Bench
The problem is that in college, you don't have to (or aren't supposed to) pay the players. All the money raised goes directly towards building the facilities. The problem here is that the Maloofs, and rightly so, would look at that $300 million as money that is just being transferred from their pockets to the arena. In essence, it's the same as them just paying for the arena themselves which isn't right since they have the costs of operating the franchise as well. Colleges don't have to worry about operational costs or at least operational costs on the level of the NBA.
Gary
All-Star
So basically we rented the Kings for 25 or so years.. UGH!
Circa_1985_Fan
All-Star
An ironic twist of fate for sure. This is gonna hurt...ALOT!
Circa_1985_Fan
All-Star
If we lose the Kings, Sacramento will go down as yet another city like Hartford(Whalers) and Winnepeg(Jets) that lost their only pro sports franchise that still don't have another.
Edit: The ball is in your hands KJ, this is your legacy as mayor...do you as a former NBA All-Star want to lose an NBA franchise in your hometown under your watch?!? What WILL you do Mr.Johnson??
Edit: The ball is in your hands KJ, this is your legacy as mayor...do you as a former NBA All-Star want to lose an NBA franchise in your hometown under your watch?!? What WILL you do Mr.Johnson??
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Bricklayer
Don't Make Me Use The Bat
I'm still interested in that angel investor from down south willing to pay $150 mil just to OPERATE a theme park. Of course without Cal Expo they'll have to build it and be given the land somehow, but that's still a load of money. Besides which it owuld serve the Fair right to have a competing 365 day theme park spring up in town to bleed them to death.
Tetsujin
The Game Thread Dude
They could either use the Arco Arena land or potentially put it up next to the new downtown arena. Nothing would jump start downtown like a new arena AND a theme park
Circa_1985_Fan
All-Star
It's 'hail mary' time for sure.
I've seen developing the Natomas land mentioned a couple times. Developing *what* in Natomas? Given the number of foreclosures, homes for sale, and empty retail locations, I'm wondering what anyone would develop up here. Is a new theme park/sports/concert venue viable in Natomas?
Bricklayer
Don't Make Me Use The Bat
kupman
Starter
It could go something like this:
A 19,500 seat arena is built. 1500 of those seats are sold as mortgages. If the average seat is sold for 200 K then 300 million dollars has been raised towards the new arena. The Maloofs agreed to pay this amount in rent across 30 years in the most previous agreement
see here:
http://sacramento.bizjournals.com/sacramento/stories/2010/01/11/daily46.html
200 K may sound like a lot, however at 41 games per year for 30 years that averages to about $162/game and pre-season and playoffs would be a free bonus at this point. Plus, will $162/game be that much even 15 years into the deal?
I see some wealthy Kings fans doing it. But I also see many businesses and cooperations doing it for their clients and/or high level employees.
That leaves additional costs:
100 million for naming rights across 30 years is within market value I believe.
That makes 400 million and should put us right in the ball park. Many will say that it will cost much more. But the Nets just built theirs in Newark for $375 million (Is Sac more expensive than Newark?) The Amway center in Orlando was built for 380.
Additionally, perhaps their is a balance left over once the Arco site is sold and the loand is paid off.
The Maloofs would get their arena while contributing 300 million up front through ESR. They would then be tenants in the new arena rent free for 30 years in a place with much better amenities, which is what they are after. The city could also include parking revenue to the Maloofs on game nights.
Kamilos could control the arena on the other 320 nights per year and cash-in from concerts etc.
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Trueblood
Bench
The city is definitely a culprit in this although I don't know what else the NBA could do. They negotiated the first Cal Expo deal and backed this most recent land swap proposal. They can't be blamed for this mess.
Trueblood
Bench
I don't know. Some may see wealthy Kings fans doing it but I just don't see how someone can commit to 30 years. If there is anything that this economy has shown us, it's that nothing is guaranteed. A guy making $150,000 can be out on his *** the next week. People can barely commit to 5 years for suites, much less 30. And even if they do make that commitment, we are still looking at the cost of the most expensive seats in the arena going to construction of an arena when this money usually goes into the pockets of the Maloofs. $162 seats are going to be the most expensive club seats in a new arena and there's just no way the Maloofs are going to give up income on all 1,500 club seats. Club seats are 2nd only to luxury suite sales in the revenue dept. for owners and if the Maloofs give that up, they are going to be looking at losses every year.
Again, this goes back to my previous post and even back to the old thread a year ago. You're taking $300 million out of the Maloof's pockets from the sales of these 1,500 expensive seats and putting it into the construction of the arena. Instead of hoping that you can find enough wealthy Kings fans to commit to 30 years, it would be infinitely easier to just tell the Maloofs to pay $300 million over 30 years which is what they agreed to do. Whether they do that or give up the rights to the expensive seats doesn't make a difference. It's still $300 million out of their pockets only this way, you don't have to bank on people committing to 30 years.
Also, the Maloofs are agreeing to pay $300 million because in return, they would have control over the arena events. $10 million a year isn't as steep as one would think because at Arco, they have control over very little as the arena is limited in what events come in and out due to it's outdated nature. In a new arena, you're practically getting an extra $10 million a year off of what you can host as opposed to what you were limited to at Arco. Therefore, Kamilos having control of the arena is probably out of the question as well.
But your numbers towards the bottom line of the arena are interesting. It won't be as cheap as Orlando or Newark because those broke ground a lot earlier than a hypothetical Kings arena will but if you build at the Arco site, you're looking at a pretty cheap deal compared to what you have downtown. I'm sure it could go for between $400-500 million. If the Maloofs are committing to $300 and Macquarie Capital, who COULD front the money, is willing to toss in another $50 million or so on naming rights, then you would seem to be getting pretty close. I only stress COULD because in the convergence deal, they were Kamilos' connection. Not sure if they would be on board with him out of the picture but they did say that they wanted to get their feet wet on the west coast so we'll see.
I'm guessing the city would be less willing to help out given that it wouldn't be downtown but I have to think that there's got to be some sort of tourist, alcohol and cigarette tax that would be able to make up the difference.
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Section 101
All-Star
+1 !
kupman
Starter
It is one of the advantages of ESR. You do not have to right your name in the seat in blood. If a person hits hard times, they can sell the seat or even sub-rent it out to someone else.
It is 300 million either way. The huge advantage of using the ESR model is that the 300 million goes towards the principal in the very short term. With the Maloofs paying 10 million/year in rent across 30 years most of that 300 million is just going to interest on the loan.
This is a good point. I actually do not know if you need Kamilos at this point. Maybe the Maloofs do this with the Aussie bank themselves and control the thing 100% of the time.
I have seen the cost of the arena grow each month with the skeptics. It started around 300 and now you will see 600 million quoted. This all happened while property values were dropping. Based upon recent arena's it looks like 450 would be a high estimate. Also, get 4-5 million/year for naming rates looks common.
Would the city still donate the land in the railyards for this project. It would make sense if they would. Adding 15k people to he downtown area seems to make more sense than an abandoned railyard from a tax revenue standpoint.
They could fix their business model. Owners of teams like Charlotte, Memphis, Minnesota and Sac shouldn't have to lose a pile of money in order to serve the larger markets of the NBA by being their punching bags. Would it really be so horrible if we had a $100M, 12,000 seat arena with a reduction in luxury amenities? Player salaries, arena expenses, it's all gone way out of control. Unless Stern wants to start reducing the number of franchises, he needs to fix the mess he made. We just don't have enough metropolitan areas of >5m to support the way things are now.
Bricklayer
Don't Make Me Use The Bat
Oddly teams like San Antonio, Portland, and Orlando do a lot of the punching.
You could up revenue sharing, but unless it was draconian it wouldn't save an unworthy city. Given a choice of staying in a berg that could only fill a 12,000 seat arena with half a dozen luxury boxes vs. moving on to one that could provide 15,000 with a dozen boxes, the owner would still choose the latter
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Also OKC, which is losing money hand-over-fist. My guess is that the Spurs are solvent, but are Portland or Orlando making any money? With the NBA's closed-book setup, I'd be hesitant to speculate that they were.
We do have some figures, though. Per Stern, the NBA has lost over $1.2B in the last 5 years, and expects to lose $400M this year. That's just pathetic.
EDIT: From a 10-month old story, "Paul Allen's Blazers are reported to have lost $20 million, and the Mavericks are reported to have lost $17 million. Three other winning teams lost money (Orlando, Atlanta, New Orleans), but the rest of the deficit contingent is made up of the league's worst squads of a year ago (Pacers, Bobcats, Nets, Bucks, Grizzlies, Wolves, Kings)."
So here's your trend from last year, from largest market to smallest:
NYK: + (>$21M)
Nets: - prior to ownership change
LAL: + (>$50M)
LAC: +
Bulls: + (>$50M)
Wizards: no reports of losses
Warriors: no reports of losses
Celtics: no reports of losses
Dallas: - Blame their goofy owner
76ers: ? conflicting reports
Houston: + (>$30M/yr)
Atlanta: -
Miami: ? conflicting reports
Detroit: ? conflicting reports
Phoenix: no reports of losses
Minnesota: -
Denver: no reports of losses
Cleveland: + although that era's probably over
Orlando: -
Sacramento: -
Charlotte: -
Portland: -
Indiana: -
San Antonio: no reports of losses
Milwaukee: -
Utah: no reports of losses, although IIRC they took out an emergency loan from the NBA
Memphis: -
NO: -
OKC: -? reports are mixed
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Trueblood
Bench
Well, I wouldn't listen to anything that Stern says regarding how much money teams make. Of course he's going to say that the owners are losing money. That way he can gain leverage in collective bargaining talks which answers your first question of why he isn't doing anything about the business model. The answer is that they are doing something and that's why they are starting collective bargaining agreement talks at this early date as opposed to waiting to the last second which is what they did last time and we missed 30 games.
OKC isn't losing any money. According to the link at the bottom of this post, they made 12.7 in the year they went 23-59. In fact, I don't know how Stern comes to the conclusion that the league is "losing $400 million". If you look at the far right column, which denotes whether a team was profitable or not, I come up with a net total of the league making over $200 million as opposed to a negative $400. That's a $600 million swing.
Or they could be ignoring the profitable teams and just adding up the total of the losing teams but you still have a total of only negative $110.8 which is still almost $300 million better than a negative $400.
I don't know but I'm guessing that maybe they could be talking about adding up every unsold ticket and lost sponsorship in the league and coming up with $400 million but whatever they're doing, it's not the traditional "losing $400 million" as in being in the red.
When you get down to it, Forbes is in bed with the owners so if anything, they are fudging the numbers to make it look worse than it really is. Like you said, I would like to see them open the books. You seem to be implying that they have their books closed to keep from being embarrassed about losses when in actuality, they do it so they can keep lying to the public and making their problems look worse than they really are.
I don't add the Maloofs to that list though. They were pretty up front on the Larry King show talking about how they make money some times and lose on others. They didn't BS everyone by saying that their payroll was on par with the rest of the league as they were honest about it being in the lower 40's this year although they did try to say that it was a "little below the cap" while it's actually a good $15 below. Other than that, they were pretty honest.
http://www.forbes.com/lists/2009/32/basketball-values-09_NBA-Team-Valuations_Rank.html
There were reports several months later (to the great glee of many former fans in Seattle) that OKC was actually losing a LOT of money during the '09-'10 season.* They also flatly contradicted Forbes on the financial status of some other teams, e.g., Detroit, Miami, and Philly were said to be in the red. I'm thinking that Forbes' guesses are not infallible.
Sure, Stern could be exaggerating, and it's in his bargaining interest to maximize the appearance of losses. At the same time, it's his job to keep the owners happy, and for many owners, the time they actually DO make money is when they finally sell the team. By portraying things that bleakly, he is seriously hurting any owner who may want to sell this year, or (if the CBA negotiations go badly) maybe for quite a lot longer than that. He's also hurting every team which might want credit based on equity in their franchise.
With the NBA's books being closed, we can't do better than educated guesses and plausible rumors.
Is there anything which would make you believe that the NBA's turning a profit?
---
* MSNBC, February 2010: "sources say that among the teams losing money by the barrel are Atlanta, Memphis, Detroit, Miami, Orlando, New Orleans, Oklahoma City, Indiana, New Jersey, Minnesota, Charlotte, Milwaukee and Philadelphia."
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Trueblood
Bench
Well, I'm merely going by the far right column and adding it all up. You get a + $200 plus profit margin. This coming from a publication that has many NBA owners in it's club and would have no reason to side with the players. They want the owners to have as much leverage as possible and you only do that by exagerrating losses but even they have a plus 200 number.
As for OKC, the only way they can say that they lost money is if you factor in the money that they paid the city of Seattle to get out of the lease. That was $45 million. Subtract that from their profit margin and you have a pretty nice loss. Otherwise, if you just go by basketball related income, they had a very nice profit number. Low payroll to go with half their games selling out plus a playoff appearance and an upgraded arena that had re done suites and loge boxes. So if they made $12.7 million in '09, you have to figure that they did a lot better last year. But they'll never tell you that and Stern wants to make sure that they don't lose leverage so they'll complain that they lost $20 million or so.
A basic spread sheet looks something like this. An NBA team makes money off of the national tv deal, their local cable/tv deal, radio rights, corporate sponsors, ticket sales, suite sales, lux tax payout for teams under the threshold, merchandise sales that is a form of revenue sharing in the league and so on.
Their expenses are player payroll, coaches, front office personnel, the 100 or so people that are employed and work as ticket sellers and what not, travel and lodging expenses, medical insurance and miscellaneous items.
The national tv deal nets everyone $32 million. Merchandise hits at around $5 million per team. Right there, you have $37 million before you sell one ticket. A team like the Kings, with a low $43.5 payroll practically has the payroll taken care of right there before you talk about ticket sales, corporate sponsors and broadcast rights.
Understood. But, even if we assume that Forbes is correct, and Stern, msnbc and other sources are just making stuff up, that would still give you an incorrect figure for the NBA. I used to work under someone whose previous job was VP of the NBA, and they made something like $40M/yr. (after stock options, etc.) as my superior. Now, I'm sure that was a step up in pay for this person, but by how much? How much does it cost to keep flying 100 or so refs around the country? To bombard us with "Where amazing happens" ads all the time?
Franchise losses != NBA losses.
Trueblood
Bench
Well, I can agree with the concept of the league only being as strong as it's weakest market. Because of that, I agree with the owners trying to tighten up and change the economic landscape to make it more favorable to their bottom line. If 12 owners are losing money, IMO that's 12 too many. But let's be honest about it. We've seen Forbes break down the bottom line with tons of numbers and research and we get a number that's $600 million above the "$400 million loss" that Stern throws out as leverage. MSNBC and the rest of the talking heads are just mouth pieces for that agenda. I'm not even asking them to open up books or anything along those lines but at least let us know where they get these numbers. Show us a spread sheet like Forbes does or something. Instead, we just hear the number "$400 million" and everyone takes it as gospel without doing any research or homework and conclude that things are more disastrous than they really are.
Gary
All-Star
Definitely.. I would not support a single team in Sac whoether it be the Rivercats or some other humdrum minor league bullcrap.. Sac needs the Kings and these politicians are just retards that could not play ball therefor they don't give a crap if the Kings leave. They all need to go out like Budd Dwyer and I am damn serious. These people are toying with the town of Sacramento, and they don't even give a crap.
Geoff
Starter
What does the Kings in Sacramento have to do with the Rivercats in West Sacramento??? I don't see how you can "punish" another team doing it right because a team in a different sport in a different city (and county!) is having problems.....
Doesn't make sense to me.
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