Sacramento arena deal; still beating a dead horse

by CalWatchdog Staff | January 23, 2013 3:27 pm

Jan. 22, 2013

By Katy Grimes

“Sacramento deserves its shot to keep the Kings,” the Sacramento Bee editorial headline[1] said this morning.

“Deserves.” I really don’t like how that word is so carelessly tossed around.

[2]

What Sacramento deserves is a city council and Mayor with some fiscal responsibility, vision, restraint and common sense. The ability to prioritize wouldn’t hurt either.

Kings going to Seattle?

On Jan. 21,  the Maloof family[3], the King’s owners, announced “that an executed purchase and sale agreement has been reached to sell the family’s interest in the National Basketball Association (NBS) Sacramento Kings to a group led by investor Chris Hansen.”

Sacramento Mayor Kevin Johnson immediately reacted and sent out a Tweet announcing that the deal wasn’t done. “Let me be clear. Though agreement btw Maloofs & Seattle is out, deal is NOT done. Sac can still present an offer 2 NBA BOG. #playingtowin,” Johnson tweeted[4].

A friend of mine also reacted, and asked if our mayor was proposing one more time that Sacramento taxpayers buy the Kings.

He quickly did the math for me and explained that it would cost the city of Sacramento nearly $450 million to buy the Kings outright ($300 million if it bought only the Maloofs’ controlling interest), and about $500 million to  $1 billion to build a downtown arena.

It is insane for Johnson to continue to pursue an arena for Sacramento. Voters have already soundly defeated ballot Measures Q and R, which would have taxed city residents to pay for an arena. The Sacramento Grand Jury called the ballot initiatives, “Betrayal in the Kingdom[5].”

In reaction to the ballot defeat, Mayor Johnson and his arena supporters drafted an incredibly risky plan to exclude the voters on a new arena scheme. And they nearly got away with it.

Despite the failure of more than a decade of efforts to build a new, publicly funded sports arena in Sacramento, many in the city thought that the project finally breathed its last breath last spring, thanks to Mayor Johnson, City Councilman Rob Fong, and state Sen. Darrell Steinberg, D-Sacramento, who arrogantly tried, but failed once again, to ram the stinky deal through the system.

Today, USA reported,[6] “In a letter intended for California Department of General Services director Fred Klass that was distributed to USA TODAY Sports and a select few other media outlets, California Senate President Pro Tem Darrell Steinberg raises questions and concerns about Microsoft CEO Steve Ballmer’s involvement in the proposed purchase of the Kings while lobbing veiled threats all along the way. Ballmer is part of the Seattle-based group that has reached an agreement with the Maloof family that owns the team to buy a majority interest for approximately $341 million (based on a $525 million total valuation of the franchise).”

This is not good politics.

USA Today[7] printed Steinberg’s letter to Klass, the director of DGS:

“I am troubled that a company and a CEO that has for so long enjoyed a prosperous and beneficial working relationship with the State of California and its taxpayers would blatantly engage in activities which are clearly and measurably detrimental to our State’s job and revenue base – not to mention use profits earned through business with our State to appropriate a California-based asset.”

“As a legislative leader with direct budget authority, I’m obviously concerned about what impact these events might have on state and regional revenue, as well as our recovering economy.”

‘World class city’

Mayor Johnson thinks that Sacramento will never achieve “world class” status without a sports arena.

Sacramento politicians have repeatedly tried to force a publicly financed arena deal down the throats of the taxpaying public, as well as on the privately-held team owners. But every time, they have crashed and burned.

“With overstated revenue projections, grossly overstated projected attendance numbers, and practically giving away city-owned parking garages to sweeten the finances, neither city officials nor local news media ever performed due diligence to expose the bad business deal it would have been for taxpayers,” I wrote[8] last April. “Media was in the bag, along with rabid sports fans–at any cost. It was a typical government involved project, with bad numbers, pie-in-the-sky plans, lots of hype, and no accountability.”

And all the while, from the sidelines, was the Bee cheer leading Sacramento’s future financial demise.

Sacramento is facing a major downgrade of the city’s outstanding debt, is preparing to borrow $2 billion to repair the long-neglected sewer system, is sitting on $1 billion of redevelopment debt, is facing an $469 million liability for unfunded city pensions, and hasn’t set aside a anything to cover its $440 million liability for retiree health care costs.

No means no

The handwriting is on the wall again. Sacramento taxpayers, gird your loins. It sounds like the Mayor may come around looking for more taxes for an arena, or figure out a way to use public money without a vote. Either way you slice it, it’s still a bad financial deal all around.

Arenas[9] don’t bring in more tourist dollars; they just move around existing money. And, arenas[10] usually require heavy subsidies. In Sacramento, taxpayers [11]want nothing to do with subsidizing an arena, which should be an entirely private-sector deal anyway.

After the last arena deal died in April, I cheered, but only on behalf of taxpayers. And my words[12] still ring true: “Government is at its best when there is less of it. The only thing the City of Sacramento can do right at this point, is to stay out of the way of those who have vision. The government’s vision is always about controlling, and not about the private sector thriving. Real world class city leaders will do everything in their power to boost the local economy by allowing the free market to do what it does best.”

Source URL: https://calwatchdog.com/2013/01/23/sacramento-arena-deal-still-beating-a-dead-horse/

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