AEG’s All In For Sacto

Sacramento recently cleared the way to finance the construction of a long-debated, $391 million arena and AEG has followed suit with an agreement to operate and book the venue and invest $58.75 million in the project.

That’s no small change for AEG; the investment reportedly represents the second largest buy-in for the company after the Staples Center in Los Angeles and will be AEG’s first arena project since the recession.

But CEO Tim Leiweke, during a press conference in Sacramento, explained AEG sees Sacto as a long-neglected market finally on its way up.

“We think we timed the economy perfect,” Leiweke told the Sacramento Bee. “You never go to an economy when it’s at its peak. You go to an economy when it’s at or near the bottom.”

Some may see it as a risky venture. The Maloof family that owns the NBA’s Sacramento Kings had been toying with the idea of moving the team for years to sunnier climes like Anaheim, Calif.

But Leiweke explained that, despite AEG’s initial reservations about the project, the company was convinced through meetings with NBA Commissioner David Stern, Sacramento Mayor Kevin Johnson and the Maloofs.

“It’s telling that we have this much faith in the marketplace,” he said. “We’re willing to bet on this community.”

AEG isn’t alone in the risk, however. A copy of the plan recently obtained by Pollstar shows the city will pitch in $255.5 million and the Maloofs will contribute $73.25 million.

On the upside, the new venue should provide plenty of opportunities for naming rights, advertising and other revenue streams, Leiweke said.

He told the paper AEG has been in discussions with several companies over naming rights, which could go for as much as $6 million per year and would be split between the company and the Maloofs.