AEG president: We’re betting on Sacramento and the mayor

City officials and the new arena operator said Tuesday they are making progress on the terms of an arena deal for Sacramento, but there is still a long way to go before a final agreement is reached.

AEG President Tim Leiweke joined Mayor Kevin Johnson, City Councilman Jay Schenirer and City Manager John Shirey at the mayor’s weekly press conference to talk about the ongoing discussions and the specifics of AEG’s role with the proposed entertainment and sports complex.

“We have a lot to do and today begins the process,” Leiweke said.

AEG is a sports and entertainment presenter based in Los Angeles.

City representatives, the Maloofs, the NBA and AEG came to a tentative agreement for an entertainment and sports complex on the eve of the March 1 NBA deadline, preventing the Maloofs from relocating the team.

Despite having a prepared term sheet in place, Johnson said there are still details to finalize on the arena, including key elements of the pre-development stage that will help define the full scope and design of the project and move the process to environmental review.

City representatives are also discussing the future of the city’s parking assets, Johnson said.

“Our city manager is doing our due diligence to make sure the parking makes sense,” Johnson said. “We’ve said we have to protect the general fund, we have to protect jobs and we have to protect parking rates. That is our commitment.”

Johnson said the city manager’s office will be releasing a completed request for proposal soon, which will be sent to potential operators who have expressed interest in taking over the city’s parking inventory.

Johnson, Leiweke and representatives from AEG met with Sacramento Kings’ team owners, the Maloof family, for the first time Monday – discussions Johnson described as “productive.”

“We are optimistic about the possibilities,” he said. “This is the first time all of the partners are in the room together.”

AEG operates 130 arenas and entertainment facilities in the United States and around the world, including five on the west coast: The Rose Garden in Portland, Citizens Business Bank Arena in Ontario, CA, Key Arena in Seattle, Staples Center in Los Angeles and Valley View Center in San Diego.

With its $57 million equity investment in the entertainment and sports complex for Sacramento, Leiweke said AEG will be making its largest arena investment in any city in the country in its history.

“This group is the best at what they do – not only in this country, but in the world,” Johnson said. “They’ve committed as an operator and with nearly $60 million equity in the project. They are betting on Sacramento because they believe in our potential.”

Leiweke said AEG will make its money back on the deal through proceeds from selling the naming rights and sales of club boxes and suites.

“If we don’t do a good job at that, then this will be the first building in the history of AEG where we’ve lost money. Up to now, we’ve had a perfect record,” Leiweke said.

Leiweke said he anticipates the new facility will host approximately 150 events per year – similar to what the arena in Kansas City has done in the past year – and perhaps more because, unlike Kansas City, the Sacramento arena will have an anchor tenant in the Kings.

“In the industry, there are a lot of people betting against us, but we’ve never failed with an arena, ever – and it’s not going to start here,” Leiweke said. “I’ll bet on Sacramento, and I’ll bet on the mayor.”

Leiweke and the contingent from AEG will be in Sacramento until Wednesday when they head to Los Angeles for a meeting with NBA officials.

Melissa Corker is a staff reporter for The Sacramento Press. Follow her on Twitter @MelissaCorker.

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March 20, 2012 | 8:25 PM

Of course they like the odds…if the Kings moved to Anaheim, it would cost AEG $500 million in media rights. Keeping them in Sacramento for 30 years is a safe bet for them!

AEG makes a profit off the Kansas City arena–but the city of Kansas City pays the interest on the bonds used to build the arena out of their general fund, and because AEG takes their share before the city sees a cent, the city’s share of the arena profits never even come close to the bond payment.

March 21, 2012 | 12:22 PM

Besides AEG’s presence here yesterday, was the announcement/ Press Conference by a group of activist and downtown residents, preparing to launch an initiative to force a vote on the city of Sacramento’s contribution to the arena proposal.

That Initiative should make for some interesting reading…along with a new chapter in this debate.

It’s so unfortunate that the actions of the mayor and 4 others on council have forced the city residents to initiate this action. The data they relied upon suggests that there is substantial support for the proposal, yet they chose not to provide an Advisory vote on the issue.

That may well prove to be their undoing!

P W
Avatar of P W
March 21, 2012 | 5:56 AM

Bill-think of it this way – in 20-30 years, you’ll have more history (and fodder) to write about on the SacPress pages about the development and progress of the rail yards…the good, the bad AND the ugly!

March 21, 2012 | 12:23 PM

Or just maybe, the good, bad and ugly may be written on election night this coming November.

March 21, 2012 | 7:21 PM

PW: There is already plenty of local history about taxpayer-funded boondoggles that were supposed to draw suburbanites back downtown and save the city from itself. In the late 1960s, it was pedestrian malls, today it’s arenas, but the sales pitch is basically the same.

March 21, 2012 | 9:19 AM

I seriously doubt that former Mayor Fargo or any of the pretenders running against Mayor Johnson would have been able to attract AEG or keep the Kings in Sacramento. Also, what’s the story with D6 Councilmember Kevin McCarty only showing up on Tuesdays (meeting day) at City Hall and neglecting his constituents?

March 21, 2012 | 10:13 PM

Councilman McCarty is not “neglecting his constituents.“ Speaking at a press conferences is an invitation-only ordeal. Mayor Johnson has no reason to include McCarty in this process –as McCarty doesn’t support the current arena deal.

March 22, 2012 | 10:54 AM

Izzy – the comment above is nothing to do with the press conference above. It is based on recent observations that McCarty is not at city hall except on Tuesdays.

March 22, 2012 | 11:32 AM

Sounds like your down there a lot Pocket GOP.
Word on the street is that you just might be someone’s $80K special assistant.

March 21, 2012 | 11:54 AM

Anybody watch the Sacramento Kings game last night? Kings win!

March 21, 2012 | 1:14 PM

Of course AEG likes this. They put in $59M and get back $5.7M/year; we put in $255M and get back $1M/year.

I would love that deal. Anyone care to give me a similar one?

AEG will make all its money back in under 10 years. The Maloofs will start making noise about the arena no longer being adequate in 15, due to poor construction and the rush-nature of that deal back in 2012. And we’ll break even in 255 years. Terrific.

This is an example what happens when you don’t have the smartest guys in the room on your team.

March 21, 2012 | 2:06 PM

From last night’s meeting:

4th Street & I Street Intersection Modification Project
http://sacramento.granicus.com/MetaViewer.php?meta_id=381324&view=&showpdf=1

Is this another “slight of hand” move for the proposed arena project? Improving pedestrian access to the Sacramento Valley Station using more federal funds? Or just piggy backing?

Where’s the Intermodal…Again?

March 21, 2012 | 2:10 PM

winning!

March 23, 2012 | 9:39 PM

You seriously think there is going to be an Intermodal? I mean why should KJ care that we’ll have to give back the federal money–any more than he cares that we will be spending an entire year’s budget to entertain the super rich? It’s not his money. It’s ours. I mean it’s not like he actually represents us or anything.

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