José Luis Villegas / jvillegas@sacbee.com

Mayor Kevin Johnson expects to present the NBA on Friday with a Kings purchase plan, along with a commitment for a new arena. Last year's plan included money from AEG, the Maloofs and the NBA.

More Information

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  • Leading Off: Road won't get any easier today for woeful Kings
  • Principles the council will vote on include:
    • No new or increased taxes will be considered for financing of the arena. Beneficiaries of the arena may be asked to contribute through ticket surcharges or assessments.
    • The city's loan to the Kings must be retired.
    • The new arena must be located downtown and provide economic development opportunities. The city and team owners will agree on a location that best meets the interests and goals of the city and stakeholders.
    • The city will consider investing the net value of its parking, land and other assets.
    • Given its financial contribution, the city will own the new arena.
    • There must be a secure, long-term commitment to keep the Kings in Sacramento.
    • The reuse of the existing arena site in Natomas is critical in defining the project's success.

Sacramento City Council to consider different deal on Kings arena than last time

Published: Tuesday, Feb. 26, 2013 - 12:00 am | Page 1B
Last Modified: Thursday, Apr. 4, 2013 - 12:36 pm

Sacramento's new plan to finance a downtown sports arena may wind up being vastly different than the deal reached last year between the city and the owners of the Sacramento Kings.

City officials said Monday they aren't starting from scratch in their quest to develop a financing plan for an arena, but acknowledged in a staff report to the City Council that last year's plan "and all its detail will likely change in this scenario."

The City Council will be asked tonight to give top city officials the go-ahead to begin formal arena negotiations with a private investment group interested in buying the Kings and keeping them in Sacramento. The council is also being asked to commit $150,000 to pay consultants and attorneys to represent the city.

At the moment, the council still hasn't officially been briefed on whom the city will be negotiating with. It's widely known, however, that Mayor Kevin Johnson has been talking to Southern California billionaire Ron Burkle and 24-Hour Fitness founder Mark Mastrov.

The city is under a tight timeline. Johnson has said he will deliver a purchase offer to the NBA by Friday to rival a deal the owners of the Kings have made to sell the team to a group seeking to move them to Seattle. Then the city and the investors will have until mid-April to agree on an arena deal. That's when the NBA board of governors will decide whether to accept the Seattle bid.

Both City Manager John Shirey and the mayor have held informal talks with the interested investors in recent weeks. Those talks have progressed to the point that city officials now believe formal negotiations are the logical next step.

Assistant City Manager John Dangberg said Monday that the investment group continues to request anonymity.

"We are respecting the wishes of the interested parties to remain confidential until they are ready to publicly announce their participation," he said. He added, "the principles being adopted (by the council tonight) can really apply to any potential partner."

Councilman Jay Schenirer said he has not been formally told who the private investors are, but said council members have informally heard about Burkle's and Mastrov's interest.

"We need to continue to move forward," he said in reference to tonight's council vote. "What we are spending money on is getting the best people we can to be in our corner to make the best economic decisions for the city. I hear things are moving along, but don't have details on that."

Mayoral adviser Kunal Merchant said the mayor remains confident Sacramento can deliver a Kings purchase proposal to the NBA by Friday. Merchant said it is unclear at this point when and how that proposal will be made public, but he said it could happen at the mayor's State of the City speech Thursday evening.

A potential new ownership group for the Kings is one of many factors that will require the city to craft an arena financing plan different from last year's deal.

Johnson, Shirey, the NBA and the Maloof family last year negotiated a financing plan for a new, city-owned $391 million arena in the downtown railyard. The plan received the approval of the City Council but collapsed when the Maloofs later backed out.

The city's planned contribution of $255 million would have come primarily from downtown parking revenue – either by leasing parking operations to a private firm or by bonding against future parking receipts.

In the staff report released Monday, city officials said money from parking was still being considered this year, along with "land and other assets." A surcharge on tickets for events at the arena will also be discussed.

Dangberg said the city's possible contribution this time around can't be determined until the city updates its parking analysis from last year. The numbers could be different, in part because the new arena may be located at Downtown Plaza rather than the railyard, city officials said. That may mean some key parking spots under the mall that were used to determine a value of downtown parking assets will be eliminated.

"We will be bringing in our expert parking consultants (Walker Parking Consultants) and analyze the heck out of this, and advise us what the impacts will be of the Downtown Plaza site," Dangberg said.

Dangberg said he also does not know whether the NBA and arena operator AEG will participate in the deal. Those parties had committed significant financial support toward last year's plan.

He said the city has shared a substantial amount of information with the private group interested in a Kings bid, but does not yet know the details of the proposal that group may bring forward. "That will all be learned as we begin to explore what it is they'd like to do," he said.

Tonight's City Council vote comes five months after Seattle officials signed their own tentative agreement with hedge fund manager Chris Hansen on a $200 million arena subsidy. Hansen and Microsoft executive Steve Ballmer have agreed to buy the Kings.

Seattle's arena bid continued its push forward on Monday, when Seattle city officials told the City Council that environmental impact reviews should be completed by November. That review process began last month.

The formal commitment of public dollars in Seattle wouldn't come until after the environmental review is done. That means the NBA board of governors will vote on whether to accept the Seattle relocation proposal without having a definitive arena plan in place.

Officials said Hansen is working with city officials on an interim lease at aging KeyArena, where the relocated team would play for up to three years starting in November.

The city expects to have the lease terms ready for the NBA in April.

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