Mayor planning ‘deal or no deal’ meeting with Maloofs

Mayor Kevin Johnson said another meeting with the Maloofs is in the works, but stopped short of promising that the arena deal will be revived – or that a new deal will be struck.

“Sitting down doesn’t do anybody any harm – but it won’t be dragged out,” Johnson said. “I don’t want anyone to have false hope.”

Johnson told media Tuesday at his weekly press conference that the city’s position on the arena deal remains the same, but the city will still explore all options.

“In terms of plan B, we continue to do our internal analysis,” Johnson said. “Our goal is to report back (to the City Council) on May 8.”

The sticking point in negotiations between the city and the Maloofs is the revenue projections for the project – the city’s and the NBA’s evaluations differ from that of economist Chris Thornberg, who was brought on by the team owners to give another assessment of the financial feasibility of a new arena.

“I don’t want to rehash everything or negotiate in public,” Johnson said. “If the revenue projections aren’t agreed to, then there’s nothing else to be done. We have nothing to negotiate on that point.”

Johnson said he can’t say what the outcome of the next meeting with the Maloofs might be, just that there will be one of three results: deal, no deal, or – if there appears to be good reason for it – continuing discussions.

But time is of the essence.

“We’re not going to make (the) 2015 (basketball season) if we don’t get a deal quickly,” Johnson said. “It may be hard to make 2015 even now.”

Johnson said he is “hopeful, but not confident” about further negotiations with the Maloof family, and no date has been confirmed for the meeting between the Maloofs and Johnson.

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

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April 24, 2012 | 1:24 PM

It’s interesting (well, it is to a geek like me, anyway) that no one ever questioned the Think Big report last summer stating that a downtown ESC would be worth $7B over 30 years to Sacramento. Such a claim would have required an incredible rate of return, so high that if it was true, the City wouldn’t need to provide any funding at all for this project, much less around 80% of it.

And in that backdrop, we’re supposed to believe that Thornberg is not reliable? In what universe does this even make sense?

April 24, 2012 | 1:36 PM

@Mike It’s called “think” big – not “deliver” big for a reason.
The Mayor’s laughable attempts to get the Maloofs to make a yes decision will result entirely in a big “no thanks”.

Try adding some incentives instead Mr. Mayor. That’s how business works but you don’t seem to be any good at it.

April 24, 2012 | 2:35 PM

Thornberg is not reliable for a whole host of other reasons.

One of the problems of this debate is that there are no sensible numbers. Thornberg was paid to torpedo a deal within 48 hours of a press conference. Think Big had every intention of touting the best case scenario.

I wish there were some party that didn’t have a clear agenda coming in. Oh well.

April 24, 2012 | 5:37 PM

The “Kansas City model” is “permanent arena subsidy via the city’s general fund.” There is no escaping that fact.

April 24, 2012 | 6:08 PM

I am amazed at all these folks who know more than AEG’s financial team… Does anyone really think AEG is investing in this project because its accountant’s can’t add numbers?

For Mr. Burg and the rest who think this is somehow about the Kings.. read Breton’s article in the past Sunday Bee.. The Kings are simply a distraction…

April 24, 2012 | 9:54 PM

Exactly – whether or not this is a good deal for AEG isn’t the point.

Although one could go further and ask why it’s such a good deal for AEG?

April 24, 2012 | 10:01 PM

And Breton’s Sunday column was fundamentally flawed. Summer in Sacramento has been slow for music bookings for years – it’s not a symptom of anything current and neither are the other cities or venues he cited comparable. Aside from an established summer series of concerts in the park that offer free music, Sacramento also hosts the State Fair (with more free music) that manages to eclipse most other events in that period. Music promoters around town avoid booking summer shows.

I pointed this out to Mr. Breton and he replied by stating out that AEG seems to think they know better. They might think that and it might even be true. But the column implied this was a symptom of current disinterest or recent bad management, rather than being normal for Sacramento at that time of the year.

April 24, 2012 | 10:56 PM

AEG is fine with the Kansas City model, because it makes them money in Kansas City! They get the first cut of the profits, and the city gets some if there is any left. Last year AEG made a nice profit and the city got $1.8 million. Their loan payment cost $13.8 million!

Source: http://www.pitch.com/plog/archives/2009/10/01/sprint-center-financing-explained

Similarly, AEG’s deal in Sacramento, as presented in the term sheet, would make them money regardless of whether the city of Sacramento has to dig into its general fund to pay for its construction debt. And, more importantly, if AEG can get the Kings stuck in Sacramento (and out of southern California) for 30 years, their $500 million media deal in southern California stays safe! So they stand to do quite well in this deal–what it does to Sacramento’s city finances is none of their concern.

April 25, 2012 | 9:30 AM

summer in the park and the state fair! the way you make me laugh….MC Hammer really does deter alot of events from coming here

April 25, 2012 | 10:14 AM

Laugh away chucklehead. Ask a music promoter in this town about summer bookings/events. It’s not just the music events at the State Fair (which is why that was a parenthetical remark), it’s the State Fair itself which contributes to audience attrition at other events. This isn’t a new phenomenon during that period.

April 25, 2012 | 11:40 AM

And the slowdown isn’t just local, either.

No link to offer, but arena shows worldwide have been slowing for years.

But frankly, two things wouldn’t hurt here:

1) The Maloofs maintain PBP as though they actually want people to show up;
2) They then actually try to bring shows in town.

They do neither.

April 24, 2012 | 6:04 PM

The Maloofs prove the old proverb ‘First generation creates wealth, second generation squanders it’…. the Maloofs don’t and won’t have the money to operate a competitive team.. time to move on.

April 25, 2012 | 10:11 AM

You guys ever hear of AEG Live? (http://www.aeglive.com/)
AEG are not simply about basketball, they make money from many other things.
Of course AEG are the winner here. That’s why they are keeping silent.

April 25, 2012 | 12:53 PM

AEG Live? You mean the main competitor to Live Nation, who operates the Sacramento region’s other large concert venue, Sleep Train Ampitheater?

AEG is the winner here–although they stand to lose a lot if the Kings move to southern California. So while they are still likely to stick with the arena plan in Sacramento even if the Kings aren’t included, they have a large vested interest in keeping them stuck to Sacramento–or Portland, or really any city that doesn’t threaten their southern California media deal.

Perhaps part of the Maloofs’ concerns involve giving up booking of non-Kings events in a new arena to AEG Live?

April 25, 2012 | 10:33 PM

It seems like the Maloofs are also playing to win in some sense. If they had sold the team a few months ago, $67m of the purchase price would have gone to pay off their debt to the city. Apparently, if the city gives up on a deal and builds a competing venue without the Kings, the debt is forgiven. And if the Maloofs can make a case that somehow the city wrecked the deal (and it may not matter exactly how credible that argument is), they might be able to claim that it has damaged the value of the team as the basis for backing out of the loan and litigating for years, or settling for a far smaller amount. Either way, they basically win by being able to sell the team without handing $67m to the city.

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