Tag: Here We Build


Jimmer fever in Sacramento might help bring new arena


Jimmer Fredette, the most talked about player in this year’s NBA draft, was selected No. 10 overall by the Sacramento Kings on Thursday.

30 minutes later, the Kings had a splash page with his likeness up ready to sell tickets on their website. Within another 30 minutes, Jimmer was trending worldwide on Twitter and was the 20th most searched term on all of Google.

By the time he arrived at the royal airport the next day, the Sacramento fans had gathered en masse to welcome him to his throne, conveniently forgetting the contention by many basketball types that he is a slow, white, geeky chump.

So as he descended down the airport escalator doing a poor man’s rendition of the Heatles’ introduction in Miami (not four times, not five times, not six times did he ride the escalator), even the most ardent Kings fan had to wonder if he is more Ringo than John.

None of this hullabaloo should be surprising, however, after Jimmer left college basketball with a formidable cult following, recognition from just about every corner of the basketball universe, and a music video to help explain how that all works (with a very white version, here).  And while he would have likely received significant attention wherever he landed, the honeymoon in Sacramento has been amplified due to the fans’ grassroots efforts to save their team.

As we’ve reported, the Here We Build coalition being quarterbacked by former Suns PG and current Mayor of Sacramento Kevin Johnson has brought together 70 regional leaders to try to deliver an arena, including heavy hitters from the world of money and politics to go with the Joe Lunchbuckets that refused to leave Power Balance Pavilion when everybody told them that their team was gone.

Without a new arena, the Kings will almost certainly pack up for Anaheim, who has rolled out the red carpet to become an NBA city.

And despite precise measurements available to anybody with an Internet connection showing how the public would benefit both economically and culturally by funding an Entertainment and Sports Complex (ESC) in Sacramento, the appetite to publicly fund sports arenas in California is decidedly bulimic. And because of that recent history, and the ease with which one can complain about any tax, politicians in the greater Sacramento region have balked at the very real threat of the Maloofs leaving Sacramento for over 10 years.

But this time around things are different, perhaps due to reality setting in when moving vans started circling Power Balance Pavilion. Or maybe it’s the 12.7% unemployment rate in Sacramento and the 4,000 jobs the proposed ESC will create, or the hundreds of millions of dollars the region would lose if the Kings leave and within just a handful of years – that word million graduates to the word billion.

The result is a creative set of funding proposals that will be considered over the coming months that will attempt to blend the perfect amount of public and private money to pay for the estimated $387 million price tag for a new ESC.

That’s right, public money. Now public money does not have to come through a direct sales tax. It can come from hotel fees, taxes on cigarettes, and just about anything a city or region would like – but it has to be approved (in this case) by a city council or regional authority that ultimately wants to get re-elected. Whereas prior arena funding efforts were largely unpopular, in conversations I’ve had with local politicians off the record, there is a palpable fear of the political fallout in future elections should they fail to deliver here.

As for the Maloofs, they liquidated nearly all of their ownership in the Palms Casino, eliminating $400 million of debt from the family’s balance sheet. For all intents and purposes they appear to be mobilizing to contribute to the private portion of the funding arrangement, though it’s unclear how much they’re able or willing to spend.

The question the Here We Build committee will seek to answer is what an operator would be willing to pay (and for what type of profits in return), what the Maloofs would be willing to pay as simple tenants (and what other profit-centers they would be willing to invest in), and then what funding the Sacramento region can get approved through its decision-making apparatus for the public piece – which naturally will happen when they compare the cost of their investment compared to the projected revenues and profits from audited reports.

And naturally, the investment will look better when the Kings are playing well, when they’re selling tickets and securing sponsorships, and when the Maloofs can kick in more money to the project with those higher projected revenues to lean back on.

Enter, the Jimmer.

Less than 24 hours after touching down on the tarmac, the Kings rolled Jimmer out with his two fellow draftees, Isaiah Thomas and Tyler Honeycutt, for a ‘Rookie Rally’ that begs the question of whether Justin Bieber grabbed Doc Brown’s DeLorean and kicked off his 80s mall tour. I’m only slightly sure that reports of grown men screaming and fainting were exaggerated by the press.

Despite the obvious marketing opportunity Jimmer brings to the table, the contention from Kings management is that he was drafted based purely on basketball ability, and whether the fans believe it or not — they don’t care.  It is a rare, if not unprecedented, example of a team’s fans and media knowingly and willingly taking the bait.

The fans in Sacramento know that his defense is an issue, they know the team’s defense is an issue, and they know that the team has at least five shooting guards and no true point guard. They know that the Kings could have addressed the gaping hole at small forward by drafting Kawhi Leonard, who is also known as the guy that the four-time NBA champion Spurs traded up-and-coming George Hill for.

They also know the move to trade Beno Udrih for John Salmons was made to accommodate Jimmer’s development, and while most of them believe that Salmons was not the right guy to bring in, only a muted few are screaming about not drafting Leonard.

When team president Geoff Petrie conveniently forgets the extra year on Salmons’ contract when he talks publicly about the trade leaving them in the same spot financially, nobody points out the $3-5 million per year that Leonard would have cost – compared to the 31-year old Salmons at about $8 million per year for three years (and a partially guaranteed fourth year at $7 million).

And no, the fact that the Kings may need five basketballs to be used during the game to keep everybody happy is not lost upon them. But while Kings fans recognize that there could be some chemistry issues, they’ll be quick to point out that Jimmer’s new teammates have all made statements that they’re excited to play with him.

Though Kings fans have watched their neighbors in Golden State crash and burn with it for years, they want to know what Don Nelson’s fun-and-gun offense would look like with Jimmer at the helm. After all, nobody in their right mind is expecting anything more than a No. 7 or 8 seed in the playoffs, so why not play a brand of basketball that’s exciting to watch.

And yes, they know that for every Steve Nash that there is an Adam Morrison, though if Morrison could have jumped like this then maybe he wouldn’t be out of the league.

Most importantly, Kings fans know that it doesn’t matter who the team drafts if they’re playing in Anaheim. And that’s where they’ll be if they don’t sell some tickets.

As for Jimmer-mania, the only thing that appears to have the ability to stop it would be the lockout.

Talking with vice president of tickets sales for the Kings, Phil Horn said “We are excited to welcome all of our rookies to the market,” adding, “As far as specific marketing initiatives, stay tuned.”

Horn could be playing coy because something big is coming down the pipeline or he could be in a holding pattern due to the lockout, and surely it should be a concern that any momentum for the arena effort get halted for any reason.

But judging by the estimated 5,000 people who showed up to see him at the mall, I’m guessing the Kings will have no problem marketing him with or without his presence on the team appearance circuit.

And whether or not he was a selected based solely on the merit of his play, it is inconsequential to Kings fans right now.

For them, Jimmer clearly gives them the best chance to win, and anything else that he can do on the basketball court right now is icing on the cake.

Kings Arena Update: Kevin Johnson working with Ron Burkle’s right hand man

anderson kj romani

The Sacramento Kings arena saga took an interesting turn on Wednesday when it was announced that the Maloof family had given up majority ownership of the Palms Casino after a “recapitalization agreement” with their main creditors, TPG Capital and Leonard Green and Partners. The deal reduces the Maloof’s ownership from about 80 percent to 10-20 percent, but the Maloofs will continue to operate the casino.

The recapitalization agreement doesn’t come out of nowhere, however, as Bloomberg News and many Las Vegas outlets reported in January that there was a strong chance that this would happen, though the Maloofs refused to acknowledge that they would sell or that the Palms was in trouble.

Meanwhile, on Monday, Mayor Kevin Johnson announced the identities of the 70-person Here We Build committee, named after the grassroots movements created by Blake Ellington of #HereWeStay, and modified into #HereWeBuild when local radio personality Carmichael Dave created a pledge drive for the ages.

And if you’re a fan of political and financial All Star teams, you probably want to stand in line to get your briefcase autographed.

Headlining the committee as co-chairs are California Senate President pro Tempore Darrell Steinberg and California State Senator Ted Gaines, though the big heavy hitters here include the guy whose feasibility study is being used as Sacramento’s blueprint, David Taylor, and political heavyweight Darius Anderson, who presented to the NBA Board of Governors back in April when the Maloofs applied their full court press to move the Kings down to Anaheim.

As for Taylor, his ICON Venue Group is partially owned by sports facility giant Anschultz Entertainment Group (AEG), who has the money and wherewithal to quickly implement a time-sensitive, politically driven arena project, though there have been no public statements made to the effect that they are on board in an official capacity for now.

Anderson’s inclusion is the largest elephant in the room, however, since he is a close advisor to none other than billionaire Ron Burkle, who was reportedly interested in buying the Kings back in April.

It was this interest that created the most quotable moment in the saga to date, when NBA insider Sam Amick reported that Commissioner David Stern made a wise crack saying K.J. was bringing him a “used car dealer,” but upon learning that the billionaire was interested in buying the Kings he grew quiet and then said, “You’ve got Burkle?”

Burkle was recently ranked No. 347 by Forbes among the world’s richest billionaires, and he built his empire in the grocery industry, parlaying several successful deals into a massive financial empire across many industries.

When the Maloofs were confronted with news of Burkle’s interest in buying the Kings at the NBA Board of Governors meetings in April (a move they claimed to have rebuffed a month earlier), they were outwardly angry and they insisted that their team was not for sale. Stern would eventually echo those sentiments by downplaying a potential purchase by Burkle, and since then Burkle’s name has fallen out of the Kings’ news cycle.

But that doesn’t necessarily mean he has stopped flirting with professional sports. Burkle, also a part owner of the Pittsburgh Penguins, has reportedly joined up with Dodger great Steve Garvey to form a group interested in purchasing the struggling Dodgers franchise. This follows his attempts to buy the Pittsburgh Pirates and Washington Nationals, and if you go back to 1999, his failed attempt to bring football to L.A. with, wait for it, AEG’s Tom Leiweke.

Incidentally (or not), AEG attempted to lure Burkle’s Penguins from Pittsburgh to Kansas City, and after that failed, AEG would later help Kansas City pass a public-private ballot measure to build the now-thriving Sprint Center that returns the city significant revenue based solely on concerts and events.

And just when it appeared that Burkle was falling off the Kings’ radar, a May 18 report came out of Las Vegas from none other than Lifestyles of the Rich and Famous host Robin Leach, who wrote that Burkle “insists on re-entering the Las Vegas market.” After the company Burkle bought shares in, the Morgan Hotel Group (MHG), failed to turn around their struggling Hard Rock Café property – it was sold off to creditors in March, much to the chagrin of Burkle, apparently.

Afterward, Burkle upped his ownership stake in MHB to approximately 30 percent and installed his guy, Michael Gross, as CEO.

At least one investment banking group, Jeffries, believes they intend to grow the company rather than sell it. Leach, who may not appear on the outset to be the best source of financial news, has spent the last 10 years on the Las Vegas industry news beat, and goes on to write that Burkle and his Morgan Hotel Group have “been actively kicking the tires, examining facilities and asking tough questions of a hotel group (in Las Vegas) willing to sell off one of its properties.”

Wait. Didn’t the Maloofs just sell? Yes they did – to two separate private equity firms in Leonard Green and TPG Capital. TPG owns Caesars Entertainment and would theoretically take over the Palms, but Leonard Green has also been trying to buy up gambling entities while the gambling industry is bottoming out – so it’s still anybody’s guess what the end-game is over at the Palms.

Let’s be clear – Leonard Green isn’t Burkle, and Burkle isn’t Leonard Green, but maybe Burkle is Finkle and Einhorn is a man.

Leonard Green and Burkle’s investment firm, Yucaipa Companies, both bought large portions of the grocer Whole Foods in 2009. And in 1991, Burkle sold his Almac’s grocery stores to Leonard Green for $75 million. All the while, both have been extremely active investing funds for the California Public Employees Retirement System over the last two decades. Surely it’s possible that in the elite rungs of society, where the billionaires play Kevin Bacon’s Six Degrees of Separation game with themselves all the time, that any interaction between the two entities is purely coincidental.

But just to be sure, I may have to go down to the Palms this Wednesday when Burkle will reportedly be there to celebrate the NHL awards and ask him about it myself.

The Maloofs, for their part, are not publicly tipping their hand regarding the involvement of Darius Anderson. George Maloof recently told Dale Kasler (via Ryan Lillis) of the Sacramento Bee that Anderson’s involvement in the committee “doesn’t give me any thoughts or concerns.”

As for the state of the funding hunt taking place in Sacramento, the jury is still out whether the $400 million wiped off the books at the Palms will allow the Maloofs to bring more money to the table for a new Entertainment and Sports Complex (ESC), though that doesn’t mean they should have to. After all, as reported yesterday, Anaheim is going forward with improvements on the Honda Center and is welcoming the Kings with a shiny new credit card. Besides, it’s entirely possible the new financial flexibility could be funneled back into the Palms, though pumping up your newly divested asset with freed up funds doesn’t sound like ‘Plan A’ for cash-strapped NBA owners looking to fund an arena.

Regardless, the Maloofs have said that they would contribute toward funding the ESC, so this would appear on the surface to give them better flexibility in doing so.

The 70-person Here We Build committee, meanwhile, consists of every expert, partner, planner, lawyer, community leader, and politician that would be needed to complete an endeavor of such magnitude. According to a source close to the situation, the NBA has also “firmly planted their feet in Sacramento,” and has “sent their best lieutenants to work day and night to get an arena built.”

Numbers-wise, the commission has enlisted the services of at least three well-respected consultancies to review the economic impact of the undertaking, which according to well-placed sources will show enough tax revenue and job creation to not just justify the new Entertainment and Sports Center – but also give political cover to the various bodies that will need to approve the proposal.

What this means, the source says, is that the tenor of the discussion in Sacramento has changed from ‘we don’t want to pay for this’ to ‘we need to pay for this, as it may very well be the difference between economic revival and economic disaster.’ And while there will certainly be skeptics and opposition groups that may choose to latch onto the issue, they could be committing political suicide as the Here We Build committee continues to release positive economic findings.

What does it all mean? It’s hard to say anything definitive right now. But while Kevin Johnson orchestrates his regional dream team, the powerful triad of Darius Anderson, the ICON-David Taylor group, and the NBA are knee deep in the fight to keep the team in Sacramento. And whether or not AEG or Ron Burkle can come along for the ride, the amount of firepower in Sacramento right now is big news for Kings fans.

Update (Saturday, June 18, 2011): The Sacramento Bee reports that the Maloofs will own just two percent of the Palms, according to regulatory documents.  They could have the option to buy back a significant share, up to 20 percent, and in the meantime TPG and Leonard Green will each own a 49 percent of the company.

On the surface, this would strengthen the chance that the Maloofs are freeing up funds to contribute toward Sacramento’s proposed Entertainment and Sports Center.  As for TPG and Leonard Green, the fact that the pair would have matching 49 percent shares creates an interesting dynamic, whereby each company could have the same voting rights (with the Maloofs holding a tie-breaking vote).