Thursday, November 16, 2006

In Sacramento – it’s David Stern to the rescue

Wednesday night the Sacramento Kings remained at the edge of a cliff, waiting to be pushed off and out of Sacramento. Sacramento voters last Tuesday night overwhelmingly rejected two key measures that would have provided a publicly funded arena for the NBA franchise. Owned by Joe and Gavin Maloof, the arena measures were rejected by a resounding 80 percent. Nine days after staring at the end of the NBA in Sacramento, Joe and Gavin made their first intelligent decision in months – they turned their arena fortunes to NBA Commissioner David Stern.

“The Maloofs have never wavered in their interest in keeping their teams in Sacramento and they have requested that we take a leadership role in helping them achieve that goal,” Stern said.

“We believe that David Stern’s combination of experience and creative thinking will help us find a plan that will work for both the public and the team,” Joe Maloof said. “We will remain an integral part of the process, but the league is going to take the leadership role going forward. Gavin and I and the rest of the management team are going to be spending 100% of our time supporting the Kings and Monarchs and enhancing the experience of our loyal fans and community partners.”

Are the Maloofs really committed to keeping the NBA in Sacramento? That remains to be seen, but this is certain – the Maloofs were their own worst enemies when the voters decided the fate of an arena plan the Maloofs and the City of Sacramento signed in early August. Six weeks later in mid-September the Maloofs pulled their support of a proposal that would have seen taxpayers pay $470 million towards the cost of a proposed $530 million state-of-the art facility. Then weeks before the vote, the Maloofs drew the scorn of voters and public indignation when they appeared in a Carl’s Jr. Burger commercial eating burgers washed down with a $6,000 bottle of wine.

Ever the politician, David Stern made it clear Wednesday evening he doesn’t believe there is any damage control the NBA has to deal with in the aftermath of the November 8 vote.

“No, because, well, I guess you might say that there was a campaign and a lot of things done, even in the negotiations and the like, that maybe different people would like to have back and do them a little differently. Tie them up in better ways, and buttoning them down rather than tying them up.”

“But I think in some ways the election, the result, everything that has gone past, has sharpened everybody’s focus. And so we now know that we can either do it or we can’t, but from the NBA’s perspective, we’re going to devote enormous resources to try to do it. I don’t mean enormous resources to trying to get some vote or another, I mean resources to determine whether what seems to be a very good marriage – the Maloofs and Sacramento, Sacramento and the NBA – is something that should be continued in the context of a spanking-new, multipurpose facility for the city of Sacramento and the Monarchs and the Kings. And it’s as broad as that, and I think what goes on will help inform us, but I’d like to think that in some ways it will help to inform everyone who participated and maybe some who didn’t, to see exactly what it is that we all want and what is it that’s possible and what investments need to be made on all sides,” Stern commented.

The Kings moved from Kansas City to Sacramento in 1985. There wasn’t an arena in Sacramento at the time forcing the Kings to play at the Arco Arena, with a seating capacity of 10,333 as a make-shift arena, while the current ARCO Arena was being built. It was nicknamed "The Madhouse on Market Street" due to the rowdy crowds.

The Arena closed in 1988 and was converted into an office complex.

The current home of the Kings opened in 1988, seats 17,317 for basketball, and has 30 luxury suites and 412 club seats. It cost $40 million to build and was completely privately financed. The Kings have enjoyed 313 consecutive sellouts at 18-year-old Arco Arena. That’s more than 17,000 tickets sold for each game the last seven and a half seasons. The Kings may claim their sellout streak is in place, but Wednesday night the Kings website advertised ticket availability on the teams’ home page.

At $40 million Arco Arena it is the cheapest built venue in the entire NBA. The costs of arenas have increased immensely since 1988, but even by 1988’s standards the Kings current arena has become severely outdated (compared with the newest wave of NBA arenas built since the early 1990's) in terms of the number of luxury suites, amenities, concession stands, and diversity of entertainment options. ARCO Arena's simple, utilitarian architectural style is also seen as plain and uninspired when measured against these newer facilities around the league, many of which make rather bold and flamboyant design statements.

If the NBA is to stay in Sacramento the franchise needs a new arena. Does the NBA have a future in Sacramento – any sports team who has enjoyed a sellout streak that has reached its eighth season is one of the more impressive sellout streaks in professional sports history. As damaging as an 80 percent no vote at the ballot box, Sacramento residents who were polled by The Sacramento Bee days ahead of the vote made it clear they support the Kings, love the NBA but had no interest in a proposal that asked taxpayers to contribute nearly the entire cost of a $540 million arena.

A master of communications and a strong sense of how to deliver the right message, Wednesday night David Stern made it clear from the start the Maloofs have made it clear they want to keep their business where it is, in Sacramento.

“Last week, Deputy Commissioner Adam Silver and I met with the Maloof family to discuss the situation -- I guess it was earlier this week – in New York, to discuss the Sacramento arena situation, and at the request of the Maloof family, we’ve determined that the league office will direct future efforts with respect to the possibility of their being a new multipurpose arena for Sacramento, which among other things would be a home for the Kings and the Monarchs,” said Stern

That alone has to be comforting to the Maloofs. Taxpayers like the NBA, support the Kings, but the Maloofs had become the problem. Stern had nothing to gain by suggesting there were any leftover issues following last weeks vote, and by taking charge removes the biggest problem that remained before, during and after the vote – the Maloofs, and puts new faces – the NBA, in front of taxpayers

”We can assure you, or I can assure you that the Maloofs have never wavered in their interest in keeping the teams in Sacramento and their hope, expressed directly and fervently to me, is that my taking the leadership role here would help them achieve that goal. I don’t claim to have a secret plan of any kind, but what I would like to do by taking this position is to enable the Maloofs to spend one hundred percent of their time supporting the Kings and Monarchs and enhancing the experience of Kings and Monarchs fans and community partners because the reality for us is that Sacramento is a spectacular NBA success story” Stern said.

“The Maloof family and the city of Sacramento have been a great partnership. I think there were skeptics who questioned whether the NBA could succeed in Sacramento, if at all. I have a personal relationship with the market – I was pleased to be there when Greg Luckenbill opened the very first ARCO (Arena). I was there to open the current ARCO. We can all agree that the current ARCO is not going to be the multipurpose arena of the future. That’s the premise that was underlined in the efforts of the Maloofs over the last seven years to somehow be part of an effort to secure a new multipurpose arena but we will examine every potential option, meet with anybody who may be helpful, and even those who may not be so helpful, to understand the situation.”

“Given the history of the city and the Maloofs, we just refuse to accept the proposition that there can’t be a way, given what we think (are) our collective wills. With respect to the recent election results, I had said before the election that if I were voting, I would vote against the proposal because nobody knew what they were voting for besides (inaudible). And we’re going to find out whether there’s anything worth doing or anything worth voting for,” Stern said

The perfect message and setting the stage for where David Stern wants to take the Kings. He couldn’t have put it any simpler – the Kings have a rich history of support in Sacramento, now let’s see what we can do to make this work. No overt threat to pull the plug on the team, no suggestion the Kings are going to move, just the simple message – we’ve sold out more than eight years of games, our franchise needs a new building, now let’s see if we can find a solution to the problem.

It’s been an interesting week for sports fans in Northern California. The Oakland A’s are moving 40 miles, the San Francisco 49’er have no real idea where they want to play but they’re demanding a new stadium, and into the middle of this is an outdated Arco Arena. David Stern heads into a situation where he’ll be competing for attention with Lewis Wolf and the A’s, and John York and the 49’ers, but David Stern decided to focus that issue on offering examples of how the NBA has attempted to deal with arena situations in markets similar to Sacramento.

“We do have some experience in small cities like San Antonio, which was successful; in large cities like Houston, which was successful; in a small city like Orlando, which appears to be on its way to success. We recognize, based upon the history, that there were some special challenges with respect to votes in California of a certain nature, but that’s all I know.”

“So my view is if we can just step back and say “Alright, let’s – maybe there is a series of experts that no one has consulted, that deal with these matters, maybe there is some new and more imaginative financing techniques or the like.” But we’re going to, you know, give it the 360, and see whether we can come up with it, because again, the Kings in Sacramento are an NBA success story, and I’m not interested in a seeing success end in failure. We don’t accept that,” Stern said.

And what will be the future for the NBA franchise owned by Joe and Gavin Maloof and the NBA in Sacramento? Despite the best efforts of David Stern it’s a safe bet the points raised in SBN’s November 8th Insider (written on the eve of the vote) will end up being the fate of the NBA in Sacramento and the NBA franchise owned by Joe and Gavin Maloof.

David Stern continues on message. He does his best to keep the Kings where they are, but at the end of the day ‘understands the Maloofs have the right to run their business as best they see fit. That sets up the Maloofs moving their team, but will allow the NBA to put another team in Sacramento.

There will not be an NBA franchise in Las Vegas until the Las Vegas sports books end betting on NBA games. You have to believe the wheels have been in motion for some time in Las Vegas. The Maloofs are too smart, have made too much money to not have a back-up plan in place. It’s more than likely the Maloofs have an agreement in place with their fellow Las Vegas Casino and sports book owners to end betting on NBA games.

The NBA isn’t done with Sacramento. In the coming months when Stern and his emissaries visit Sacramento Stern and company will meet business people who aren’t the damaged goods the Maloofs are in Sacramento. For the NBA history is about to repeat itself.

Robert Johnson paid a $300 million expansion fee when the Charlotte Bobcats became the 30th NBA franchise on December 18, 2002. The NBA originally expanded to Charlotte in 1987, with the Charlotte Hornets (and the Miami Heat) joining the NBA in time for the 1988-89 season. The NBA awarded the expansion franchise to George Shinn. The Hornets moved into the 24,000 seat Charlotte Coliseum. Shinn became embroiled in an alleged rape case. Shinn and then partner Ray Wooldridge moved the team to New Orleans after failing to get the public financing for a new arena. Long gone where the days of 21,000 season ticket holders, but the NBA believed in the Charlotte market. Stern and company understood it wasn’t the Charlotte market but the owners of the team in that market. Its well worth noting as soon as George Shinn left town voters supported a new arena for an NBA franchise, Bobcats Arena that opened last year.

That will allow the final piece of this puzzle to fall into place. Sacramento is a good NBA market, owners who no longer have the support of ticket buyers and taxpayers, let’s expand to Sacramento, collect an expansion fee in excess of $300 million and let the Maloof’s move the Kings to Las Vegas once they’ve taken care of the gambling issue.

Under this scenario everyone wins. The Maloofs move to a market where they’ll be “Kings” literally and figuratively by bringing an NBA franchise to either Las Vegas or possibly Anaheim. The Maloofs will get their state-of-the art arena – it won’t be in Sacramento. Stern will be the hero by ensuring the NBA’s future in Sacramento and an even bigger hero to his owners when each of the NBA’s 30-team owners collects at least $30 million when the league expands to Sacramento. And yes with the master Stern in charge the City of Sacramento will reach an equitable financing plan for a new state-of-the art arena in their city. Wednesday night that perfect plan took its next step forward.

For Sports Business News this is Howard Bloom

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