ProposedKingsArena

Sacramento Kings arena funding plan to be released Sept. 8

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We don’t know the specifics of how the city of Sacramento plans to pay for the proposed $387 million Entertainment and Sports Complex (ESC), but we do know when they plan to announce those plans.

According to Ryan Lillis of the Sacramento Bee, a menu of funding options will be presented to the public on September 8, with a more detailed report being released on September 13 to both the public and City Council.

According to Lillis:

While precise details of the financing plan are still unknown, Chris Lehane, the chair of the task force, said in a new release this morning that it will include “contributions from both the public and private sectors, including the Kings ownership group, arena developers and operators.”

He also added:

It’s also expected that an arena operator – a company such as AEG – will be approached to help with the construction costs.

While the city of Sacramento’s efforts to keep the Kings have appeared at times to be as desperate as a 55-foot game-winner, the framework for the proposed funding options has been a relative constant, and has always been envisioned to be a mix of private and public funds.

Hotel and airport taxes have been discussed, but more recently the pencil has been sharpened to include user fees such as ticket surcharges and parking fees, in addition to the sale of city-owned properties, corporate sponsorships, and revenues originating from cell phone towers and electronic billboards placed on the ESC.

In short, every dollar will count as they tally up the funds, and the inclusion of a company like AEG to both fund the project and operate the arena sounds like a must at this point. That their name continues to come up in on-the-record and off-the-record discussion is a great sign for Kings fans.

And as we posted in June, the Maloofs liquidated most of their interest in the Palms to enhance their financial flexibility. While they could have done that simply to free up money for their continued involvement in the Palms, as George Maloof said was the case at the time, it stands to reason that being relieved on a $400 million note will help them be able to pitch in.

So where does the rubber meet the road here?

First, the Think Big Sacramento coalition, which includes 70-some odd politicians, businesses, community leaders, and the original grassroots leaders such as Carmichael Dave and Here We Stay — they will need to procure support within the Sacramento City Council, and then also have enough public support to marginalize attacks from any opposition groups. Attacks could come in the form of lawsuits seeking injunctive relief, most likely on the grounds that the use of public funds will require a public vote. The Kings arena effort would likely come up short if a vote is needed, so avoiding such a challenge will depend on the exact nature of the public funds being used and the appetite for opposition groups to go through a costly legal and political fight.

A lot of that appetite will be derived from what the folks in the Sacramento region actually think about this public subsidy. Losing the Kings will necessarily be a blow to the area, and most believe they will not be able to get an NBA team back should they lose this one. In the battle to attract businesses and the new-age worker that values a city’s identity, this could be a defining moment for the entire region.

And that is where the battle for public opinion is taking place. The Think Big Sacramento group is doing a commendable public relations job, with interactive campaigns targeting not just Kings fans, but folks that may be more inclined to see Disney on Ice than five shooting guards and one basketball. Between the town hall meetings, the dominant social media work they’re doing, and local events featuring non-basketball types such as world-renowned artist David Garibaldi (seriously, check out his work) – it’s safe to say that they’re not making the mistakes of the ill-fated arena tax campaign from 2006 that was easily rejected by the voters.

But as with anything else, you have to follow the money, as public funds come with questions about tax allocations, economics, and the like. Today, I spoke with leading sports economist Brad Humphreys (and expert witness in the Sonics vs. Seattle case no less), who has been outspoken about the problems with sports stadium subsidies (as are most of his colleagues), and the takeaway is that this isn’t just a Sacramento issue – it’s a United States issue.

Due to the artificial lack of supply (teams) in the major sports leagues, a De facto monopoly, teams have the leverage to demand public subsidies. If the city of Sacramento wants to belabor the point, the Kings will have a new address in Orange County – and that scenario has played itself out a number of times.

I’ll be scratching together another post about my conversation with this economist, which covered everything from sports subsidies to the Kings to the lockout. Interestingly, he said he wasn’t against the Kings’ arena subsidy, and in one (not yet peer-reviewed) white paper he wrote,

A new state of the art facility integrated in a comprehensive urban redevelopment program and located in the heart of a large city might be expected to generate increases in residential property values in the vicinity of hundreds of millions of dollars within a mile of the facility, if the location, planning, construction, and development are carried out carefully.

While most economists are mostly aligned in saying that no empirical evidence has been found to show that the presence of sports teams and so-called big sporting events (i.e. the Super Bowl) actually bring in additional tax revenue, let alone to cover the cost of the subsidy — it doesn’t mean that the proof doesn’t exist.

Sacramento County had a $40 million reduction in budgetary revenue this year due to the drop in property values in the area, which is money that they’re not getting back. That loss of revenue comes from the fact that people aren’t willing to pay as much to live in the Sacramento region.

So assuming, annually, the county gets the 1% property tax revenue on a theoretical ‘hundreds of millions of dollars (of increased property value) within a mile of the facility,’ this unexplored area of sports economics could answer the question as to why cities continue to ignore economists’ clamoring. While people may spend their entertainment dollars elsewhere (the substitution effect) if the Kings are not in town, they won’t necessarily pay as much to live there. The intangible benefits of living by your favorite sports team or having the option to go to an A-list show – those benefits may be being capitalized in ways economists have yet to find (or in this case, may be on the precipice of finding).

Humphreys took great care to point out that the case of Sacramento is unique, and that cities with downtown revitalization projects have had both success and failure. But in the world of data that economists live by, one thing is clear – they’re simply not ready to buy the economic impact reports that teams are selling, but they’re also not ready to rule out that the sports subsidy could be a good thing.

After all, everybody is doing it.

Mike Krzyzewski: Team USA having too much fun, needs to tone it down

OAKLAND, CA - JULY 26:  DeMar DeRozan #9 of the United States Men's National Team looks on during a break in the action against the China Men's National Team during the second half of a USA Basketball showcase exhibition game at ORACLE Arena on July 26, 2016 in Oakland, California.  (Photo by Thearon W. Henderson/Getty Images)
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Mike Krzyzewski hates fun (even more than he admits).

So, the coach wasn’t thrilled after Team USA’s exhibition win over China, which included DeMar DeRozan nearly 360-degree dunking on someone.

Marc J. Spears of ESPN:

I want to see Team USA make highlight plays. Dunk from the free-throw line. Shoot from halfcourt. Throw behind-the-back passes. Show up weaker competition.

So, it’s hard for me to get behind Coach K’s criticism.

But I also want to see the Americans win gold medals in the Olympics, and I’ll blame Krzyzewski if they’re not adequately focused.

Fair? Not one bit.

Doesn’t change what I want, though.

Report: Kevin Durant told Russell Westbrook he’d re-sign with the Thunder

OKLAHOMA CITY, OK - MAY 28:  Kevin Durant #35 of the Oklahoma City Thunder and Russell Westbrook #0 look on prior to game six of the Western Conference Finals against the Golden State Warriors during the 2016 NBA Playoffs at Chesapeake Energy Arena on May 28, 2016 in Oklahoma City, Oklahoma. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement.  (Photo by Maddie Meyer/Getty Images)
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Kevin Durant said he had to distance himself from Russell Westbrook entering free agency. Yet, Durant listened to the Warriors recruiting him all season and had clearly been interested in Golden State for months.

The writing was on the wall.

Except, a few days before taking meetings in the Hamptons (which led to signing with the Warriors), Durant dined with Westbrook.

Royce Young of ESPN:

Three weeks ago, Kevin Durant’s sitting there at dinner, telling him “Hey, I’m coming back, man. Don’t worry about it.” And now, Russell Westbrook has been kind of thrown into this in having to decide his future a summer earlier than expected.

Kevin Durant, more so than even that, was telling people, “Hey, yeah, I mean I’m coming back.” Like I said in there, a week before Kevin Durant sat down in the Hamptons, he was in Oklahoma City ready to make an offer on a multi-million-dollar house. So, the guy was pretty serious about coming back, and then things turned rather quickly for him to leave. And there’s no doubt that the organization felt a little bit burned by this.

Maybe Durant said that. Maybe he meant it in the moment. Maybe he was just trying to appease someone he didn’t want to let down. Maybe he was unclear. Maybe Westbrook read too much into a more clear statement.

There’s a lot of room for imperfect recollection/interpretation. We’re dealing with human beings.

Likewise on the house. Who says Durant was “ready” to make an offer? That’s an awfully difficult assessment to make outside his head. Just as the Celtics had a list of players Durant wanted them to add, it seems he was preparing for all contingencies. It’s hard to nail down rather he was house hunting because he was certain he wanted to stay in Oklahoma City or whether he just wanted a new place if he stayed in Oklahoma City.

So much of what we know about Durant’s process for picking the Warriors suggests a rational decision. He considered them for months, met with multiple teams, conferred with his inner circle then made a choice.

If Durant told Westbrook or anyone else he’d re-sign with the Thunder, that obviously changes the equation. But I’m left wondering:

How many people in Oklahoma City heard what they wanted to hear rather than what Durant actually said?

How many people are incentivized to paint Durant as impulsive, because the alternative — Durant thoughtfully deciding the Thunder weren’t his best option — indicates deeper flaws in the franchise?

Watch Carmelo Anthony put up 16 points in third quarter on China

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Kyrie Irving, Klay Thompson, Kevin Durant, and DeMarcus Cousins are pretty much locked in as four of the Team USA starters come the Olympics. But who gets that fifth slot, the one for a wing player? Paul George? Jimmy Butler?

Don’t be shocked if Carmelo Anthony gets that slot.

He helped make his case Tuesday, scoring 16 in the third quarter alone on China in an easy Team USA victory in a pre-Olympics exhibition. Mike Krzyzewski likes to reward veterans, and ‘Melo is one of the old guy leaders of this team who has collected two gold medals already. Don’t be surprised if ‘Melo is a starter in Rio (Draymond Green started Tuesday, but only because the game was at Oracle Arena and Coach K likes to give guys a bigger role in front of the local crowds where they play).

DeMar DeRozan just missed spectacular in-game 360 poster dunk (VIDEO)

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Can a missed dunk attempt be brilliant?

DeMar DeRozan says yes.

The Toronto Raptors guard almost pulled off an in-game 360-dunk over a defender during the USA’s latest rout of China in an Olympics tune-up game. How impressive was the dunk? Ask LeBron James.