Sacramento jumps the shark on arena deal

March 24, 2013

By Katy Grimes

Sleep_Train_Arena_interior

Some people want something so badly, they’ll sell their souls to the devil, they’ll ignore facts, reason and important details.  A case in point is Sacramento politicians, and the ongoing arena obsession.

Sacramento’s Mayor Kevin Johnson, tweeted Saturday evening he and city officials have reached a  $447.7 million arena deal at the Downtown Plaza with a public-private partnership.

There’s only one problem — Sacramento can’t afford it.

Billed as “the largest redevelopment project in city history,” the project will have up to 1.5 million square feet of offices, housing, stores and a high-rise hotel.

The deal would require the city to commit “$258 million in value, or 58 percent of the arena cost,” according to the Sacramento Bee. “Of that, $212 million would come from selling bonds backed by future revenues from city downtown parking garages. The city’s contribution is the same as it was in last year’s aborted project to build an arena at the downtown railyard.

For a guy who is 6’3″, Johnson has a severe case of Napoleon complex, but on behalf of his hometown. And he is willing to commit the taxpayers to even more indebtedness to appease this small city complex.

The Bureau of Labor Statistics reports Sacramento’s unemployment rate is 10.3 percent. But that’s not the whole story. The unemployment rate doesn’t count discouraged workers who have stopped searching for work, workers who are marginally attached to the workforce, and workers who because of economic reasons work only part time. Add that together and  the “real rate of unemployment,” is more like 20 percent, as it is in the rest of the state.

But we’ll have a new arena.

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My dream car…

I want a Ferrari 599 GTB, but I don’t exactly have the money right now. However, if I sell my house, and liquidate my retirement account, I could come up with $350,000 cash.

There’s only one more problem — the maintenance on the car is a little expensive. Every service is at least $15,000, and some cost $30,000. I’m not at all sure how I would pay for this, but I’ll worry about that when the time comes.

This is the ultimate in insecurity. This is how Sacramento overcomes its loser, cowtown image and insecurity issues. For the insecure, NBA and NFL teams provide the perfect cover.

The art of the deal

The city also agreed to give the private development group the city’s empty 100-acre plot next to Sleep Train Arena in North Natomas, as well as six other city properties, five of them adjacent to or near the downtown arena site,” the Bee reported.

As proof that no one has shoved any money to the middle of the table yet, the Bee also noted the 18-page preliminary term sheet is non-binding.

But the city may have jumped the shark. “A series of major hurdles lie ahead for the Johnson-led effort, starting this Tuesday. City Manager John Shirey said he will ask the council to approve the term sheet Tuesday night at the city council meeting the Bee reported. “That would allow the city to pitch its plan April 3 to the NBA in New York.”

Seattle still wants the Sacramento Kings, and it’s not over yet.

“Representatives of Seattle also will be in New York that day, detailing their existing agreement – signed last month – to buy the team from the Maloof family and build an arena of their own in Seattle.”

The NBA board of governors will be voting on the Seattle deal April 18. “If it votes no, the Maloofs could entertain the Burkle-Mastrov-Ranadive group’s offer to buy the team.”

There’s no telling what will become of Sleep Train Arena, owned by Maloof Entertainment Group, located in North Natomas, just north of the city. It’s still the perfect location for an arena. There is no congestion issue, parking is plentiful and it is isolated and away from downtown.

Democratic politicians all have one thing in common — they all are always willing and eager to put taxpayers in more debt on ego deals the cities do not need, and cannot afford. If any of them had ever run a business prior to politics, stupid deals like this one would be laughed out of the city.

Read some of my other stories about Sacramento’s ‘stimulus’ arena, Sacramento’s vanity project, Sacramento arena deal still beating a dead horse.

Here is the term sheet on the proposed arena deal.

Note that the city does not even own the land parcels in the deal.

4 comments

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  1. Left of Rio Linda
    Left of Rio Linda 24 March, 2013, 20:00

    I used to pull this strategy when I was a kid, make a commitment to do something or go somewhere without parents permission and then try to get them to go along by saying “I already said I would” to extort permission after the fact. Never worked.

    Reply this comment
  2. boethius
    boethius 24 March, 2013, 23:59

    Your analysis is 100% spot-on. If I see KJ fist-pump in celebration that Sacramento is “keeping” the Kings (again – we all remember his faux-celebration with the Maloofs on center court) I may have to throw up. A downtown arena is a massive boondogle especially given they’ve had the perfect site already for over 20 years, one that will be vastly less expensive to upgrade than build an entirely new arena in a terrible part of town.

    Sacramento is hardly the first city to mortgage its future for a professional sports team and I seriously doubt it will be the last, however KJ is utterly shameless in how willing he seems to be put the cow town out to pasture for the sake of a stupid basketball team. More debt? Yay! With Obama’s epic, aggressive debt-seeking model for running governments, KJ’s own ambitions hardly seem unique.

    Whatever happened to fiscal conservatism? Belt-tightening? Cutting services, jobs, agencies, departments, and expenses to the bone: You know, like real businesses and individuals do when they’re not profitable?

    I sincerely hope he fails, the Maloofs and the Kings leave town permanently, and that the City follows a path of extreme fiscal conservatism so Sacramento can grow the proper way.

    Reply this comment
  3. Hondo
    Hondo 25 March, 2013, 10:43

    Our memories are short. If I remember, Stockton went bankrupt, partly because it built a sports arena it couldn’t support in the best of times.
    Like i said before, the NFL has kept LA,one of the most populated metropolitian places on earth, from getting a team so it could extort arenas from all the smaller market cities in the league. Why has San Diego had a team forever. Why haven’t the Rams been replaced. St. Louis is a fraction of the market that LA is. Cleveland and Denver, teams who have sold out their games for decades, were told they weren’t ‘supporting’ their teams enough. That they had to build a new arena or else. Cleveland’s owner actually left.
    Only the largest cities can support, and afford to build these arenas. In baseball, the NY Yankees support several other teams that just can’t compete enough to stay afloat. Teams like Pittsburgh, and Kansas City. Those teams will never win the world series because their cities can’t support a payroll big enough to compete with the Yanks and Red Sox nation.
    When did you have any small market team win the NBA championships. Decades ago, Seattle won as did the Warriors. But count up the Championships of LA, Boston, Chicago, Miami. I’m stunned that NY has only won a couple. Milwaukee only won because they drafted Kareem, then he left for LA. They, like Sac town and Portland and Utah and Denver will never win anything.
    Green Bay doesn’t count. Those cheese heads are off their heads. But most of their championships occurred before free agency, like the Steelers. But the Packers and the Steelers are the exception, rather than the rule.
    Sac town will never win an NBA championship, nor will they be able to support an NBA team with the the collapse of their economy.
    Sac town should be happy to get a minor league baseball team. Minor league baseball, as displayed in St Paul Mn, is one of the most affordable and enjoyable forms of pro sport. As long as you don’t try to build and finance a gigantic stadium. The Denver Bears played in old Mile High stadium when I lived there and for 5 bucks I could go to a pro ball game and eat popcorn and a hotdog with a beer for less than 20 bucks. Can’t do that any more.
    Hondo……

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