Sacto Makes New Arena Bid

With the Sacramento Kings planning to move to Seattle and AEG now out of the financing picture, city officials announced March 23 via Twitter that an investor group has stepped up to build a new downtown arena.

The deal possibly comes a couple of months too late, at least in terms of hanging on to an anchor sports team, as the Maloof family that owns the Kings rejected one deal to keep the NBA team in town. Instead, the Maloofs announced they intend to sell the team to a Seattle investment group and move to a new arena there.

But even that’s not a done deal; the NBA’s board of governors must approve the sale, and approve the Kings’ move, which would also come with hefty relocation fees for the team’s owners.

Sacramento would build a $447.7 million arena as part of a massive downtown redevelopment project that is to include up to 1.5 million square feet of offices, housing, stores and a high-rise hotel, according to the Sacramento Bee.

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Mayor Kevin Johnson, himself an ex-NBA star, announced the public-private partnership agreement in nine “rapid-fire” tweets – an unorthodox means of announcing a multimillion-dollar civic project.

It requires the city to commit $258 million in value, of which $212 million would come from bonds backed by future parking revenues. An investor group made up of billionaire Ron Burkle, 24 Hour Fitness founder Mark Mastrov and Silicon Valley entrepreneur Vivek Ranadive would contribute $190 million to fund the arena, according to the paper.

The city agreed to give the group the city’s vacant 100-acre lot next to Sleep Train Arena, as well as six other downtown properties, as part of the deal.

The new Sacramento-owned arena would be operated and maintained by the investment group, which guarantees the city a minimum of $1 million in annual revenue, with increases depending on income, over a 35-year-lease.

The exact site of the arena hasn’t been determined, but Sacramento has set a September 2016 target date for opening. The Kings have played at Sleep Train Arena since 1988.  

Johnson took to Twitter with the news on a Saturday afternoon. “I’m pumped!!” Johnson wrote. “Ron Burkle and I officially closed the deal a few minutes ago.”

The mayor continued to tweet, noting the deal avoids new taxes and protects Sacramento on an existing $70 million loan to the Kings and said the deal has “no net impact on the general fund.”

The 18-page preliminary term sheet is nonbinding, according to the Bee.

The next move for Sacramento may be the hardest. With an arena plan already moving forward in Seattle, the mayor’s team now plans to travel to New York City April 3 for the NBA meetings to make its pitch to keep the Kings. The Seattle group will be doing the same.

If the NBA rejects the move, which seems unlikely, the Maloofs could still entertain an offer from the Burkle group to buy the team. The NBA board is scheduled to vote April 18 on the Seattle sale.