Randy Pench / rpench@sacbee.com

Proposed user fees could wind up generating more than half the money needed to pay for a new arena, according to a report released today by the Think Big Sacramento task force. File photo June 2011.

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Sacramento arena task force sees potential for $20 million in user fees

Published: Friday, Aug. 19, 2011 - 12:00 am | Page 1A
Last Modified: Sunday, Jan. 8, 2012 - 10:02 am

How about an extra 50 cents slathered on that hot dog? Or another buck to top off that beer?

Surcharges on everything from food to tickets could raise as much as $20 million a year toward construction of a new Sacramento sports arena, Mayor Kevin Johnson's task force said Thursday.

Surcharges are common in arena finance – and could raise more than half the funds needed for the $387 million facility at the downtown railyard. But sports-marketing experts say the proposal risks alienating customers.

"Fans feel like they're being nickeled and dimed," said David Carter of the University of Southern California.

Still, the task force believes surcharges, or user fees, will have to bear much of the burden if a new arena is going to get built. A completed financial package must be in place by next spring or the Kings will leave town, team officials have said.

In an analysis labeled "highly preliminary," the Think Big Sacramento task force outlined an array of surcharges that could be imposed at a Kings game or a Lady Gaga concert.

The biggest surcharge would be applied to tickets. A fee of $1 to $3 could be levied on each seat, depending on the price of the ticket.

Hot dogs, which now cost $3.75 to $4.75 at Power Balance Pavilion, could have a surcharge of as much as 50 cents. Beer – now $6.50 to $9.75 – could cost an extra 50 cents to $1.

All told, fees could add as much as $30 to the amount a party of four would spend on an event.

A more detailed analysis will be released by the task force on Sept. 8. Besides user fees, it's expected to draw on funds from private arena developers, lease payments from the Kings and revenue from a "business improvement district," among other things.

The goal is to raise as much as $30 million a year to pay the building's debt service.

No single revenue source "is going to get us there," said Chris Lehane, task force executive director. "The burden will be spread … far and wide."

User fees could generate anywhere from $5 million to $20 million a year toward that goal, the report said.

While fans have become accustomed to handling and convenience fees on tickets, Carter said imposing too many fees could harm the Sacramento project if fans scale back their spending.

"You may just be more inclined to eat at home before you go to the game," the USC expert said. "You may be inclined to buy a less expensive ticket."

Paul Swangard, a sports-marketing expert at the University of Oregon, said surcharges on tickets are commonplace in arenas, including his university's just-opened basketball arena.

But Sacramento would be taking an unusual route if it imposed surcharges on food, drinks and other goods.

"To the extent that (fees) are being added to every consumable in the building, it is less common," Swangard said.

Johnson and his task force have ruled out a broad-based tax increase, which would certainly be rejected by taxpayers. A sales tax hike for an arena was soundly defeated in 2006.

Even without a broad tax increase, financing the arena is likely to prove tricky. For instance, it's unclear how much the Kings would be willing to pay in rent as anchor tenants.

Team co-owner George Maloof said he's waiting for the Sept. 8 proposal.

"We'll take a look at it and see if we can work something out," he said Thursday.

Another possible funding source, revealed last month, involved selling city-owned real estate to generate up to $60 million toward the $387 million price tag. At least one city councilman, Kevin McCarty, has said he's skeptical about that.

The "business improvement district" might be controversial, too. In such a district, hotels, restaurants and possibly other businesses near the new arena would agree to tax themselves to help pay for the building.

Restaurant owners objected to such a plan in 2003. But this time, there's willingness to explore the idea, said Michael Ault, a task force member and executive director of the Downtown Sacramento Partnership.

"I think owners and businesses have said if they can find a tangible benefit from this facility, they'd be willing to look at it," Ault said. "How much and what level is yet to be determined."

Restaurateur Lina Fat, another task force member, said, "We have to have the details. It's very preliminary."

© Copyright The Sacramento Bee. All rights reserved.


Call The Bee's Dale Kasler, (916) 321-1066.



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