The Sacramento Kings and their fans will hold their breath on Tuesday night, as the Sacramento City Council holds the first of at least two critical votes that will determine whether or not the team leaves town.
Let me be the first to tell you that tonight’s vote will pass. Sources close to the situation report that the council is all but certain to have the votes necessary to move the process forward.
Specifically, the vote will allow the council to finalize proposals with ten competing private parking operators that will provide upwards of $200 million toward the cost of the estimated $387 million Entertainment and Sports Complex.
This will setup a vote on February 28 that will decide the Kings’ future. It is at this time that the council, in cooperation with mayor Kevin Johnson’s Think Big Sacramento coalition, will vote to approve a term sheet that will signal to the NBA that Sacramento can indeed fund an arena.
I’m also told by sources with knowledge of the situation that as long as a laundry list of criteria is met, the council will have at least the four votes necessary (not counting Johnson’s tie-breaking vote) to approve the term sheet.
This laundry list includes guarantees that the city’s general fund will be replenished by the approximate $9 million annual revenue stream currently provided by city-owned parking operations, a plan for some or all of the city’s employees to be transferred into the new parking company’s operation, a mechanism to cap rate hikes for parking in the future, an option for an agreement shorter than 50 years, and a mechanism to provide kickbacks to the city if parking revenues exceed certain benchmarks.
It is believed that within that framework, the city can meet or exceed their $200 million target.
The last major item on the laundry list is who will be responsible for cost overruns if the $387 million project goes over its budget. I’m told the city will approach the developer, David Taylor, to potentially provide that guarantee. While it is unclear whether or not Taylor would shoulder such responsibility, he will likely be given incentive to do so by an offer of development rights near the arena.
Taylor has been working on the arena deal for years and has evaluated the project for Sacramento at a significant cost to himself, and it would be surprising if he told the council that he would not be responsible for cost overruns on a project he evaluated and promoted – particularly if there is further incentive in the form of development rights.
Adding the estimated $200 million or more from parking, an estimated $30 million from local hotels, an estimated $50 million from an arena operator (AEG), and an estimated $80 million from the NBA and the Maloofs — sources tell me that the city is well in the ballpark of securing the financing necessary for the arena.
In other words, the city of Sacramento has both the will and the way to secure a ‘yes’ vote for an arena.
As far as the timing goes, while February 28 is potentially the date for a deciding vote, it is likely that the NBA will allow for an extension on the March 1 deadline so they can properly evaluate Sacramento’s findings. That announcement could come during All Star weekend. The NBA and the Maloofs could theoretically act on the city’s proposal quickly and provide their terms in time for a February 28 vote, but sources stress the important part is that the city will have communicated that it is ready to vote on a deal.
From there it is on David Stern and the Maloofs to pull the trigger on the estimated $80 million price tag, which amounts to about $3 million per year in rental payments for 30 years, all paid up front.
As for any talk of selling the team, The Maloofs have been consistent with their message that it’s not an option, and their sale of the Palms can be seen as either a sign that the ship is sinking or a sign that they were moving money for the purposes of an arena. In the unlikely event they do want to sell, Think Big Sacramento executive director Jeremiah Johnson told Seattle’s King 5 News that the city has “a number of ownership groups willing to keep the Kings in Sacramento.”
It’s not going to come to that.
The Maloofs and/or the NBA could try leverage the city of Anaheim against Sacramento, who recently made improvements on their NBA-ready facility, but after Jerry Buss and Donald Sterling just agreed to revenue sharing with small market clubs it’s less likely that the NBA will place another team in their backyard.
As for Seattle, despite their clear efforts to bring an NBA team back home, they are well behind Sacramento in their pursuit of an arena. They too would have to approve public funds for a new building, and Stern and the Maloofs will have to weigh the $80 million cost of a sure thing given a ‘yes’ vote, and a nebulous offering in Seattle that is 1-2 years away while Key Arena is a stop-gap solution at best.
With all of the support David Stern and the NBA has given Sacramento in its fight to keep the Kings – from manpower in the front office to people on the ground helping make the arena deal a reality – it just doesn’t make sense for them to pass up a viable option for two that have problems.
This is a complex situation and it is not a done deal, but the once half-court shot turned 3-pointer doesn’t even seem like a free throw at this point – it seems like a layup. The Party of Five that voted down a public vote that would have sent the Kings packing are interested in a deal that addresses the aforementioned criteria. That criteria reportedly can be met and still provide the project with the money that it needs to be green-lighted, assuming the private parties each put in amounts that seem reasonable, achievable, and already written in pencil.
Kings fans will probably wait until the shovels hit the dirt before they celebrate. Let this prediction be the first bottle of Dom Perignon.
The Kings aren’t going anywhere.