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.

Paul George disputes the idea that he’s already moved out of his house in Indiana

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Rumors spread on social media this week as moving trucks were found outside of Indiana Pacers star forward Paul George‘s house. But were they really his?

The user posted photos of giant moving trucks outside of a house in George’s neighborhood to Snapchat. People began speculating wildly that George, the subject of trade rumors for the last few weeks, could be on the move.

Now, the Pacers start has taken to Twitter to dispute the moving trucks as his. So whose were they?

According to George, they were there to move his neighbors.

Via Twitter:

Well I guess that settles that.

The other obvious answer is that they were George’s and NBA players simply move to new locations during the summer. Half of the NBA it seems lives in the Los Angeles area come the off-season, or at least train there, so seeing moving trucks outside of his house would not have been an anomaly if you ask me.

We are past the 2017 NBA Draft and still we have no deal for George. But the NBA off-season is long, and free agency is just around the corner. I am sure that we will see a new landing spot for George in the coming months.

Then we can send somebody on over to see if there are moving trucks at his house.

Hornets’ GM slips up, introduces Dwayne Bacon as Dwyane Wade

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It’s a slip that would have made Freud proud.

Charlotte had a good draft night. In the first round, Kentucky shooter Malik Monk fell to them at 11 and they grabbed him. In the second round, they took a smart risk with Florida State wing Dwayne Bacon.

Friday came the usual team press conference with the GM introducing his players and Charlotte GM Rich Cho made a mistake, introducing Bacon as “Dwyane Wade.”

I love Bacon’s reaction.

Cho instantly realized his mistake and laughed it off, then later said: “Actually, I think they have some similarities.” Hornets fans can only hope.

Kevin Durant trolls Westbrook, haters with cupcake hat — now topped with a ring

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Back when Kevin Durant and Russell Westbrook were breaking into the NBA together and learning how to win together, one of their veteran mentors was tough guy Kendrick Perkins. When Perkins thought someone was acting soft, he called that player a “cupcake.”

When news broke on the Fourth of July last summer that Durant was leaving OKC for Golden State, the NBA world freaked out. Except for Westbrook. He just posted one Instagram photo that day — a tiered tray of red, white, and blue cupcakes. It was meant as a subtle jab at Durant, but when word got out (via Lee Jenkins of Sports Illustrated) what it meant, Thunder fans embraced it and had cupcake signs and clothing made for Durant’s return to Oklahoma City.

Durant had the last laugh — he’s got a new hat with a cupcake on it, topped by a ring.

Well played Durant. Well played.

Another report Rockets “aggressively” trying to clear cap space to chase Chris Paul

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Daryl Morey is big game hunting. Again.

The Rockets, with James Harden running Mike D’Antoni’s offense, made a leap up to the NBA’s second tier last season — then landed with a playoff thud. The team should be better the second season in the same system, but to get past the Warriors, the Rockets need more talent.

Hence the Rockets are going to chase Chris Paul. That’s not new news to anyone paying attention, but Chris Haynes laid it out in more detail in on SportsCenter.

The Rockets need talent and Chris Paul is unquestionably that. He and James Harden could figure out how to play together.

The problem is money. Chris Paul is going to demand max or near-max money, so close to $30 million. The Rockets enter the summer with about $10 million. The Rockets need to clear cap space and are ready to deal so long as they don’t take contracts back. Lou Williams will make $7 million next season, so even moving him and Patrick Beverley is not enough to land a Chris Paul or Paul Millsap. Moving Ryan Anderson ($19.6 million) or Eric Gordon ($12.9 million) helps much more.

That Morey is being aggressive isn’t the news, the question is can he find a willing partner to lower some money off his cap and give him a sense of what is to come. CP3 is going to meet with a lot of teams, but the Clippers do have advantages and are the favorites to retain him.