New Kings arena will be among NBA’s smallest, but built for profit

The Sacramento Kings are abandoning an arena that has among the fewest seats in the NBA. They’re building a new arena ... also with fewer seats than nearly all other NBA venues.

The $477 million arena at Downtown Plaza, set to begin construction later this month, will seat just 17,500 fans. That’s fewer than 200 additional seats compared to Sleep Train Arena, which is widely considered outmoded and inadequate for NBA use.

The Kings’ owners say their new building will be more lucrative than Sleep Train through the magic of modern arena design. There will be far more seats in the lower bowl, translating into higher ticket prices. There will be twice as many “premium” seats, including luxury suites and lofts, which will come with VIP perks and be among the most expensive tickets in the house. Those features will more than offset the relatively small total seating capacity, team officials say.

“There will be a massive change in comfort, in amenities, in concessions,” said Kings President Chris Granger, who is overseeing design and construction. “That’s why we’re doing it.”

At 745,000 square feet, including the practice facility, the new arena will be almost 70 percent bigger than Sleep Train.

But why so few seats? The designers are following a less-is-more revolution taking place in sports economics. Spacious arenas with 20,000-plus seats are giving way to cozier buildings that, paradoxically, can generate as much, if not more, profit than the big-box facilities. It’s no coincidence that the newest NBA arena, the 2-year-old Barclays Center in Brooklyn, has a capacity of just 17,732.

The beauty of smaller arenas is that they produce more consistent sellouts. Granger said that’s what often drives season ticket sales: the fear of not being able to get a seat. Season ticket sales are the foundation of any NBA organization, and Vivek Ranadive and the other new owners of the Kings are working to rebuild a base that badly eroded during the final, difficult years of the Maloof era.

“You want to make sure you have demand,” said Bill Sutton, a former NBA league executive and now a sports-marketing consultant in Florida. “Having 17,000 seats and a waiting list is better than 22,000 seats.”

Kings executives said their new arena won’t just cater to fat cats. The upper bowl will be laden with nice touches, including a bridge-like overlook that will allow fans to simultaneously watch the game while taking a peek at what’s happening outside the arena.

The arena will include “amenities for every seat in the building,” said Ben Gumpert, a Kings senior vice president. “It’s not just a premium play.”

Some tickets will remain relatively inexpensive. “We’ll still have $10 seats on the low end,” Granger said.

Overall, Granger said, the Kings have made no concrete decisions about ticket pricing beyond some pre-sales of luxury suites. He said fans shouldn’t expect a “massive” increase in prices when the arena opens in October 2016.

Make no mistake, though: The new arena is being designed to generate more revenue than 26-year-old Sleep Train.

“You might have the same number of seats (as Sleep Train), but the yield per seat is much higher,” said Dennis Howard, a sports-marketing professor at the University of Oregon. “It’s going to be a much different mix of (seating) inventory, and a lot of it’s going to be high end.”

Perks with a price

Along with their architectural firm, AECOM, the Kings have spent considerable effort deciding how best to configure the arena seating, as well as the lounges, restaurants and common areas. Besides studying the NBA’s two newest arenas, in Brooklyn and Orlando, employees have researched such venues as airport terminals and luxury hotels, according to Gumpert.

The Kings, who are providing $222 million toward the project cost, have a good deal of in-house expertise on arena seating. Before he was hired by Ranadive last summer, Granger was the NBA’s vice president in charge of team marketing and business operations, a group that consults with franchises on how to make more money. Gumpert worked for him. One of their recent tasks: consulting with the Brooklyn Nets on the design of the Barclays Center.

Granger “is as good as it gets in terms of understanding all that,” Howard said.

Sleep Train, originally known as Arco Arena, reflects the thinking of an earlier era. With just 30 luxury suites and a total capacity of 17,317, it was arguably outdated when it opened in 1988. That same year, Detroit Pistons owner Bill Davidson opened the Palace at Auburn Hills, with 180 suites and total capacity of 22,076.

Detroit set the new standard for NBA arenas, according to Howard. Besides the suites, he said, it was one of the first buildings to include several thousand club seats, which are located in the lower bowl and offer amenities that include access to private arena restaurants and lounges.

“Every owner wanted what Mr. Davison created,” Howard said.

The model has changed over the years, and some teams have downsized. In the late 1990s, Portland ripped out more than 1,500 seats, leaving 19,980 seats. Soon after Charlotte rejoined the NBA in 2004 following a two-year absence, it replaced a 24,000-seat arena with a 19,077-seat facility.

“I think the days of 23,000-seat arenas are gone,” Granger said.

Strategies on premium seating also have evolved. The recession left some teams unable to lease out their full complement of luxury suites. Some, including Detroit, even tore up some suites and replaced them with other forms of seating.

“It looks really bad when you have a suite that’s not sold,” said Peter Titlebaum, a sports-management professor at Ohio’s University of Dayton and research director for the Association of Luxury Suite Directors.

Even as the economy has recovered, Titlebaum said, teams are de-emphasizing suites in favor of less-expensive options that still can generate more revenue than traditional seating. Similar thinking will hold true in Sacramento. The new arena will have 34 suites, a slight increase over Sleep Train’s 30. Most of the suites will have seating for 25 fans.

A larger lower bowl

Granger said the Kings already have leased some of the suites, and “the pace of sales has far exceeded our expectations.” He wouldn’t discuss pricing, but a story in SEAT magazine in 2010 said suites at Sleep Train went for $160,000 to $260,000 a year.

The relative scarcity of suites planned for the new arena reflects the absence of huge corporations with Sacramento headquarters.

“You know the deal: We have zero Fortune 1000 companies in Sacramento,” Granger said. “What we do have in Sacramento is a lot of small and midsized professional-service firms that might enjoy something smaller than a suite that still carries the same amenities, that still carries the same privacy, that still carries the same VIP experience for their clients or their employees.”

That includes a to-be-determined number of “lofts,” semi-private mini-suites to be tucked just below suite level. They will hold two rows of four seats apiece, and stations at the back for food.

For those sitting right on top of the action, there will be plenty of creature comforts as well. Besides the high-dollar courtside seats, the arena will include nine rows of “club seats” featuring assorted VIP amenities, such as access to private clubs.

The exact number of premium seats hasn’t been finalized. Gumpert said about 13 percent of the seating will be considered premium, although Granger said the final number could range between 10 percent and 15 percent. At Sleep Train, less than 6 percent of the seats are considered premium.

Even at 15 percent, the premium seating would be relatively modest by NBA standards. Howard said premium seats make up 20 percent or more of the seating at typical modern NBA arenas.

Granger said Sacramento’s edge will lie in the overall configuration of the arena. Including the suites and lofts, the lower bowl will hold 10,000 seats. That’s 2,200 more than at Sleep Train. He said Sacramento will have the second-largest lower bowl in the league, after Toronto.

“It’s a big deal,” Granger said. “It gives a significant number of people wonderful proximity to the court, wonderful proximity to the action. I think that will play very well in Sacramento.”

Editor’s note: An earlier version of this story incorrectly stated that the Kings current arena has the fewest seats of any NBA venue and that the arena planned for downtown Sacramento also will have the smallest fan capacity. The capacity of current arena is among the smallest in the association, and the new arena also will be have capacity that is among the smallest.

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