Tag Cloud
Wednesday, May 16, 2012
Report: Arena could bring $7 billion
by Suzanne Hurt, published on June 30, 2011 at 5:43 PM
Storyline: Arena
Community Tags
angelique ashby
arena economic impact report
basketball
business
capitol public finance group
cathleen dominico
chris lehane
david taylor
development
downtown
kipp blewett
mayor kevin johnson
michael ault
natomas
politics
power balance pavilion
railyards
rob fong
roger dicksinon
sacramento
sacramento kings
sheraton grand hotel
Sports
the economic engine report
Loading images
A new downtown arena could draw 3.1 million visitors to the central city each year and bring the region more than $7 billion over 30 years, according to a report released Thursday by an arena campaign committee.
The 37-page report on an arena’s expected impact to the region was released to reporters at a press conference at the Sheraton Grand Sacramento Hotel.
"In downtown Sacramento, there's a considerable economic boost, just by the fact that there really isn't a facility like that," said Cathleen Dominico, author of "The Economic Engine Report: An Economic Analysis on the Regional Impact of an Entertainment and Sports Complex," during the press conference.
"If you can create a downtown core that is a destination, it boosts not only the downtown itself but trickles out to the outlying regions," she added.
Dominico, managing partner at Capitol Public Finance Group, was joined at the press conference by arena committee Chairman Chris Lehane, who also chaired the mayor's arena task force; committee members who included City Councilman Rob Fong, City Councilwoman Angelique Ashby, state assemblymen Roger Dickinson and Richard Pan, Downtown Sacramento Partnership Executive Director Michael Ault; and past DSP Chairman Kipp Blewett of Rubicon Partners.
The press conference was held after a report summary was first presented to members of Sacramento Mayor Kevin Johnson's arena campaign committee in a closed-door meeting at the hotel. The meeting was announced two weeks ago as one of seven public meetings set this summer for the committee.
The number of visitors was estimated with an average 17,300 people attending 45 Sacramento Kings events and an average 15,000 people at more than 155 other events annually.
Visitors would be expected to spend an average of $20 each, before and after events, on food, drinks, travel and other retail. About 10 percent of them could spend another $102 to stay overnight.
Total spending outside the sports facility, before and after games and other events, was estimated at $93.6 million annually, according to the economic impact report called for by Johnson.
However, after subtracting spending by existing residents and annual spending at the Kings' current arena, net annual spending in the six-county Sacramento region is expected to total only about $24.6 million, according to Dominico and the report.
The arena's operating costs would be covered by revenue generated inside the arena, according to the report, which did not look at arena revenue.
ICON Venue Group President Tim Romani and Sacramento developer David Taylor estimate an arena facility would cost $241 million, with a total project cost of $387 million.
The cost of arena construction will be financed by a combination of public and private investment, which is expected to include Sacramento Kings annual tenant fees.
The ICON-Taylor group is developing an arena financing plan with input from Johnson's 70-member regional arena campaign committee. The group was introduced a month ago as the Here We Build coalition. The committee's name was changed this week to Think BIG Sacramento.
The ICON-Taylor group was given a late-May deadline to present an arena financing plan to the Sacramento City Council. But that didn’t happen after the Kings’ owners didn’t provide revenue information in time.
The arena campaign committee was then given until Sept. 8 to provide the council with a plan.
The Maloof family, which owns a majority share of the Kings, agreed on May 2 not to move the team if the region would undertake a serious effort to replace Power Balance Pavilion, which was constructed in outlying Natomas in 1988. The National Basketball Association and the Maloofs gave the region until March 1, 2012, to do so.
The drive to build a new arena also creates an opportunity to redevelop the existing arena, Ault said.
"We feel very strongly that this is not about a downtown versus Natomas issue," Ault said. "This is about an opportunity to activate and engage the central city. It's an opportunity to make sure that we're doing everything we can to develop something that is a replacement in Natomas that keeps them whole.
"This is something I think the region will look back on as we finally are having the right discussions and the right opportunity to really engage in a facility that's going to make a difference in this region," he said.
Suzanne Hurt is a staff reporter for The Sacramento Press. Follow her on Twitter @SuzanneHurt.
Flag Article As:
Conversation Express your views,
debate, and be heard with those in your area closest
to the issue.
Leave a Comment
For starters, we already have an arena - so this isn't something that creates revenues where nothing exists at present.
It assumes the arena is running at full speed 200 days/nights a year.
It appears to assume that none of this money is currently already being spent within the city - as if the building of an arena magically increases everybody's incomes with new and previously missing, disposable income that they will spend in and around an arena but which they aren't spending currently.
It isn't clear that it allows for reduced/displaced spending elsewhere, perhaps also within the city.
It isn't clear that it allows for local residents escaping the area during major events and spending money elsewhere, perhaps outside of the city, which might otherwise have been spent locally.
It isn't clear that it allows for non-residents who might otherwise have visited and spent money but who might now choose to stay away because of the venue and the crowds - it may simply replace one visitor with a different one.
All of which is par for the course. (Edit: I mean to say that these flaws are common in analyses of this nature.)
Bottom line is the Kings leave if a new arena isn't built or rebuilt. And a good many other non-sporting events go elsewhere too.
Maybe the Kings and other events are not worth it. That is a question only most of Greater Sacramento, by their patronage, can answer.
That's not just me. Glancing through it myself, I think it makes some very rosy assumptions. You can't do that. You have to give three scenarios: Best case, worst case, and most-likely case. All we got was the best case.
You just can't do that. Sorry, but I think the author's econ teacher would give her about a D+ because of this.
This report is NOT signed off by ICON/Taylor, or their financial advisors. It contains no imprimatur of any city financial expert. There's no CPA stamp inside. In fact it is not the work product of ANY developer, major accounting firm or investment house. It just kinda sorta looks like it could be!
In short, this is not a document which a bank can use to justify financing this project. David Carter, a bone fide expert, is quoted as saying, ""Economic reports are equal parts business, politics and public relations..." A thorough reading of this one suggests it has a heavy dose of politics and public relations, and not much else. It is only a 'feel good" document.
The outlandish claims of billions of extra dollars being spent are based on two simple, unverified assumptions; That paid attendance at ALL events will greatly increase just because the arena is moved to downtown, and that attendees will spend a lot more money per event than they do now.
Nearly ALL of those big dollar revenue numbers are driven by this unsubstantiated guesswork. Don't you think that if the Maloofs could sell more tickets instead of giving them away they would have? Where's the marketing, financial and comparative analyses to substantiate this number? Just because you put an extra seat in a restuarant doesn't mean you'll get an extra customer. And if you have to increase your prices because you built a fancy new place, you might even lose a few - or a lot! Ask any restuarant owner, theatre owner or small businessman.
The justification isn't there. The numbers aren't real. The author, who cites NO experience whatsoever in arena analysis or even large entertainment facility performance estimation, reportedly provided this to the mayor free of charge. Just as well, as the author cannot be held responsible for a complimentary work product.
But Kevin Johnson is being horribly insincere. He wants the public to believe this is a solid, bankable financial analysis of his proposed arena, and has contrived this rollout to get you to believe that: But he knows it is not.
And don't you believe it is, either.
The economic analysis was for sure a rosy one, but even a middle of the road assumption for the impact of a new arena is a lot better than the alternative, which is for the Kings, and every other event held in Sac to disappear, and allow PBP to crumble... No more high school state basketball championships in Sacramento, no more Sac State graduations there, and not even the slightest opportunity for any national or state convention, sporting event (NCAA, all star weekend, etc.), concert, performance, and anything cool that ever happens in this country to even consider coming to Sacramento.
I moved back to Sac after attending a UC, and a big part was because there IS sometimes awesome stuff happening in Sac that makes it feel like a big city. If we allowed the city to become anymore lackluster, small minded, and boring, I can guarantee this city will become a landing spot for a lot less young, educated residents and employees.