Arena coalition studies financing options
The Sacramento region will have to get creative to come up with a public-private financing plan that might work to build a new arena – possibly coming up with funding sources never tried in other cities before, a prominent sports financing expert said Thursday.
Sacramento will need a unique financing model, partly due to the community’s "limitations" in size and past efforts to gain voter support for public arena funding, Barrett Sports Group owner Dan Barrett told a crowd gathered for a town hall meeting at the Central Library.
The media market is relatively small, which makes it less lucrative, and there aren’t a lot of potential corporate sponsors here. Other challenges come from difficulties getting sports facilities built in California and the lack of more than one sports team tenant for the building, he added.
A regional Here We Build arena coalition has been given until Sept. 8 to come up with a funding plan that appeals to the public and the Maloofs, the Sacramento Kings’ majority owners. The coalition held its first public meeting Thursday.
City Councilman Steve Cohn, a member of the arena coalition, asked whether any successful financing models have been used to build new sports facilities since the recession began.
"There’s no cookie-cutter model, unfortunately. You’ve got to be real creative, particularly in California," Barrett said.
Barrett did not share what new options are being considered. It’s "too early in the process" to say what even some of those might be, he said.
The coalition will be working with sports facility gurus, city staff, Mayor Kevin Johnson’s arena task force finance subcommittee, the ICON-Taylor Group, the Maloofs and others. At least 65 coalition members and others from the community turned out for the presentation.
Their work follows on the heels of the ICON-Taylor Group, which was given until late May to present financing options as part of a feasibility study. The group told the Sacramento City Council May 26 that it had not been able to include financing in the analysis after the Maloofs didn’t turn over financial information soon enough.
Barrett and coalition chair Chris Lehane led a meeting on public-private partnerships to fund arena construction downtown. Barrett explored a range of options that have been used to build facilities in other cities.
Public funding options that have been used include sales tax, hotel tax, rental car tax, food and beverage tax, tax increment financing, land sales, and parking revenues and surcharges.
Private funding options have included equity and cash or facility-related revenue streams such as naming rights, club seats, advertising, sponsorships and corporate investment, he said.
The Maloofs announced earlier this week they have given up controlling interest in the Palms Casino Resort in Las Vegas to private investment firms, Texas-based TPG Capital and Leonard Green & Partners. The Maloofs agreed to turn a $400 million debt into equity by giving up a controlling share in the resort, according to various sources.
The Maloofs did not respond to requests for comment.
On the East Coast, some have used EB-5 money, which trades temporary visas for the financing of American ventures by foreign investors.
Barrett said they don’t know if any of those options will be viable in this region.
Broad-based tax increases haven’t been used in California. Public financing for sports facilities in this state tend to be targeted taxes, such as hotel or rental car taxes, he said.
The coalition is now trying to identify public funding options that wouldn’t require a vote, said former city Treasurer Tom Friery, a member of the coalition’s executive committee who helped lead the town hall presentation.
Arenas and stadiums in bigger markets – the Giants’ AT&T Park in San Francisco and the Lakers’ Staples Center in Los Angeles – have been paid for entirely by sports team owners. That hasn’t worked for smaller markets, because the teams don’t see as much revenue coming in from media deals and corporate supporters once the facilities are built, Barrett said.
"It’s critical to structure a deal that makes sense financially for both parties," Barrett said. "Both parties need to come away with a deal that works."
The Here We Build Coalition and Mayor Kevin Johnson’s office will hold public meetings roughly every two weeks throughout the summer. Most meetings will be held at the Central Library, 828 I St., probably at 11 a.m. But exact times and locations are still being determined, according to the arena coalition and the mayor’s office.
Economic Impact on Downtown
: Thursday, June 30, Time and Location TBD
Regional Impact Event
: Thursday, July 14, Time and Location TBD
Leveraging Existing Assets To Create Jobs
: Thursday, July 28, Time and Location TBD
Town Hall: The Future of Natomas
: Thursday, Aug. 11, Time and Location TBD
Job Opportunities Directly Related to the Project
: Thursday, Aug. 25, Time and Location TBD
Release 100 Day Report
: Thursday, Sept. 8, Time and Location TBD
Suzanne Hurt is a staff reporter for The Sacramento Press. Follow her on Twitter @SuzanneHurt.