Arena talks to continue; Maloof family's contribution chief topic
02/26/2012 12:00 AM
10/08/2014 10:35 AM
ORLANDO, Fla. - There's no deal on a Sacramento arena yet.
And as the yearslong effort to build a new home for the Kings enters its biggest moment, the focus of negotiations today will be how much the team's owners can contribute to the project.
The city is asking the Maloof family to chip in between $70 million and $90 million to the $387 million project, according to a source with knowledge of the negotiations who was not authorized to speak because talks are ongoing.
Most of that would be in the form of upfront lease payments, but would also include an estimated $25 million from the sale of land the family owns around Power Balance Pavilion.
The source said the NBA and city officials agree the amount being asked of the Maloofs is fair. However, the remaining issue is whether the family can afford what they are being asked to contribute, the source said.
"The (Kings have) said they're going to make a significant contribution and what we're negotiating is what is that number and how do we close the gap," Mayor Kevin Johnson said.
It is not clear how far apart - if at all - the Maloofs and the city are in terms of the Kings' contribution to the arena project. But the source expressed confidence that the sides were within a "solvable" distance.
NBA Commissioner David Stern said the league would not loan the Maloofs money to bridge the financing gap.
The Maloofs could not be reached for comment.
High-ranking city officials and Stern's top lieutenants met for four hours Saturday at the Waldorf Astoria Hotel inside Disney World.
Those talks are scheduled to resume this afternoon. The mayor, who was not involved in Saturday's talks, will sit at the negotiating table today with Stern, City Manager John Shirey and several other high-ranking officials from both sides.
For the first time since this process began last year, the Maloofs are also expected to be involved directly in the talks; the NBA has negotiated on behalf of the family until now.
And, in a move that could apply pressure to both the city and the Maloofs, members of the NBA's Relocation Committee will also be involved in the talks, Stern said.
"If there's a deal," Stern said, "(the Maloofs) are making a very substantial contribution."
"The Maloofs have stepped up, the city has stepped up," the commissioner added. "We're having very intense conversations. But sometimes the best-intentioned and most fervent workers don't quite get to the finish line because there are things that separate them."
While stopping short of expressing optimism that a deal would get done, Stern said, "it's really getting there, it's just not there yet."
"I've opened two buildings (in Sacramento) and I'm looking forward to opening a third," he said, referring to the original Arco Arena and the current Power Balance Pavilion.
The mayor said the sides were "within striking distance" and that there have been no discussions of extending a March 1 deadline to have a deal completed. He said he would be surprised if the plan is killed outright today.
City officials have proposed leasing downtown parking to a private operator to generate as much as $200 million to the project. The city has also asked Sacramento County officials to allow the city to collect revenue from county-owned parking garages used during arena events.
City-owned parking operations pump $9 million annually into the city's general fund budget - which pays for most basic services. It is still unclear how the city would fill that amount should parking be privatized, but a source said a significant amount of the money would come from surcharges placed on tickets and concessions at the new arena.
Another focus of the ongoing talks is the contribution made by AEG, a giant arena operator being asked to help with the upfront cost of the building in exchange for operating the facility. A source said that number is between $40 million and $60 million.
AEG has not directly been involved with the negotiations, but Chris Lehane, chairman of the mayor's Think Big arena task force, said, "we have full faith and confidence that the operator is in a position to meet its obligation."
"We know the city is ready to commit its piece, we know the operator is willing to commit its piece, ultimately this is about the Kings' piece," Lehane said.
While AEG would operate the arena, the city would own the facility.
If a financing term sheet is completed by March 1, the City Council is scheduled to vote on the plan March 6.
Should the city fail to create a financing plan, the NBA has said the Maloof family could explore moving the Kings. The team nearly moved to Anaheim last year, but was convinced to give Sacramento one final shot at coming up with an arena plan.
Asked if Anaheim remains a threat to take the Kings, Stern was reluctant to address the issue.
"I don't know," he said. "We'll see. We'll see."
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