David Stern – Expansion is Not An Option

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Feb 142013

Recent comments by David Stern indicate that, as far as he sees the NBA, expansion is off the table (sorry Peter).  He also commented that Seattle DOES NOT HAVE an APPROVED ARENA PLAN, putting it pretty much equal to Sacramento in the race of things.  On top of that, David chose to offer hope to several other cities that have been said to have contacted the NBA recently.  (Google Cache of the article “Stern Sees Continued Prosperity for NBA” is one way to read the article directly and avoid the Houston Chronicle paywall)

Q: Closer to home, you’ve been proud of the success of small markets in the NBA. If the sale and move of the Sacramento Kings goes through, how will you feel seeing a team that has been so successful leave a market?

Stern: I’m going to claim executive privilege on that one. The idea of leaving Sacramento is not a good one. The idea of going back to Seattle is a good idea. We’ll have to see how that plays out.

Q: If you end up with two viable ownership groups and arena plans, is expansion a potential solution?

Stern: I haven’t heard anything about expansion from our owners. They have discussed contraction in conjunction with the last collective bargaining agreement. I don’t think (expansion) is an option. Right now, we have no approved plan for an arena in Seattle. We have a very good potential ownership group and set of plans, but there’s a lot of work to be done. I keep a little green book with a list of all the cities interested in NBA teams and could respond pretty quickly. There’s all kinds of stuff going on in Pittsburgh, Columbus, Louisville, Virginia Beach, Las Vegas, Vancouver, Mexico City, Kansas City.

Silver: You left out the European cities.

Stern: This is all for Adam to work out. The league is going to have some good decisions to make.

Another AP article posted to ESPN has this to say:

Stern said that Johnson will attend an April 17-18 owners meeting in New York to deliver his proposal, but the league expects to have heard it by then.

“We have an April 17th meeting of the board, but if the Mayor follows through on what he’s told us, we’ll have it comfortably by March 1,” Stern said Thursday.

Johnson is trying to line up investors to buy the Kings and keep them in his city with a new arena, rather than watch them move to Seattle.

Speaking at an All-Star weekend event, Stern also said he doesn’t currently see “a push for expansion” among owners, knocking down the idea that both cities could end up with teams.

“My statement about expansion is talk to Adam next year,” Stern said, with commissioner-elect Adam Silver standing behind him. “I don’t have any plans to champion expansion between now and Feb. 1, 2014. That’s up to the ownership and the commissioner.”

Maloofs to Las Vegas – blowing up deals like it’s going out of style edition

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Feb 052013

One has to have sympathy for the Sacramento NBA fans (which might be most pro sports fans in the city, as the NBA is the only game in town).  Despite the Kings not being for sale, until the Maloofs announced a deal to sell them to Chris Hansen in January 2013, new reports emerge of the Maloofs and Heinrich blowing up a deal in Las Vegas in May 2012.


In court papers, Milam’s attorneys describe his development company’s pursuit of partnering with cable companies to create a regional sports network that would broadcast games of a future Henderson-based NBA team; the hiring of Morgan Stanley to advise on relocating a pro team to Henderson; and even touring the Barclays Arena site as it was being built for the Brooklyn Nets.

Milam’s lawyers said the developer’s team “conducted extensive discussions with representatives of numerous NBA franchises,” but the court papers name only the Kings.

On May 21, 2012, Henderson Mayor Andy Hafen and acting City Attorney Christine Guerci-Nyhus met representatives of the Maloof family, which owned the Kings, and the largest nonfamily partner, Bobby Hernreich, in New York City.

No deal was made. The Kings recently were sold to a Seattle investment group.

So, list of Maloofery and cities damaged while “not for sale” – Anaheim, Las Vegas, Virginia Beach, and most of all Sacramento ?  Or is this just a timed leak to help the NBA say “any deal where these guys aren’t in the club anymore is to be applauded”.  It’s also interesting to note that the Las Vegas deal involved a Chinese company financing much of it..  The purchase of NBA teams is still showing a decent return on investment, especially when you can write down the purchase costs over the first decade or so of ownership.

A Closer Look at the Right of First Refusal Clause for the Kings

Aaron Bruski appears to have gotten his hands on some Kings ownership papers and does a bit of a breakdown on what they say about minority shares.

VA Beach – I’m Not Dead

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Jan 282013

Like Monty Python:

I’m not dead.

Hey’re, he says he’s not dead.

Yes he is.

I’m not.

Virginia Beach is still lining up funding for an arena…  despite their targeted team and Comcast-Spectacor being unable to make a deal.  I guess some state legislators felt all their efforts towards figuring out how to pay for an arena in Virginia Beach shouldn’t be wasted ?

A local lawmaker won the first round today in his effort to get the state to help Virginia Beach build a sports and entertainment arena that could attract a national sports franchise.  Del. Ron Villanueva’s legislation (HB2320) would allow the city to issue bonds to build an arena and to receive state tax revenue generated by the facility to repay the bonds. The measure was approved by a subcommittee and now advances to the full House Finance Committee.

Villanueva’s effort comes in the wake of now-suspended talks aimed at attracting a National Basketball Association franchise, the Sacramento Kings, as the anchor tenant of a new arena. The talks broke off when the would-be arena operator couldn’t come to terms with the team.  Villanueva told the subcommittee he wants to have a mechanism in place to ease the way if the city gets another opportunity to attract a national team.  “The Hampton Roads market is ripe for a sports facility,” the Virginia Beach Republican told the panel.  When talks with the Kings were under way, the proposed deal included $150 million in state support. But Del. Bob Purkey, R-Virginia Beach, said today that local lawmakers made it clear to city officials “there was no chance in hell” of a direct state contribution.  Instead, Villanueva’s bill allocates state income and sales tax revenue generated by an arena to pay off the construction bonds.

Virginia Beach’s Crazy Idea – Have a Team Before Asking for Public Money

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Jan 022013

With the start of the General Assembly session looming, city officials are waiting to see if the company that would operate the estimated $346 million arena can reach a deal with the NBA team targeted as the building’s anchor tenant. Sources have said since August that the team is the Sacramento Kings.

If an agreement is reached, city officials can make the pitch to state lawmakers for $150 million to help build the 18,500-seat arena. If there’s no deal, the project is dead.

Mayor Will Sessoms said he hopes to hear this week from officials at Comcast-Spectacor, the company negotiating with the team, about which way it will go.

“It’s critical,” he said of an agreement. “I can’t go to Richmond and plead for money if we don’t have a deal.”

More from the Virginian Pilot.

One thing to keep in mind with the Kings is that their plan to stay in Sacramento was done with AEG being the arena operating partner.  AEG is on the market and probably isn’t looking to do any major business expansions until that’s all sorted out.  Comcast-Spectacor is filling that “AEG-role” in Virginia Beach’s plan.  Seattle is going to have Chris Hansen’s ArenaCo as the arena operator, a shadowy LLC that hasn’t even been assembled yet.

Does anyone have Tim Burgess’ contact info ?  I seem to recall Licata saying they were going to evaluate Hansen’s business model with a third party.  How’s that progressing ?

UPDATE – Announcement from VB Mayor Sessoms expected Tuesday Jan 8th

I’m not exactly sure why the Sacramento Bee has the inside line on when the Virginia Beach mayor is going to announce if Comcast-Spectacor has reached a deal with “the mystery NBA team”, but they’re claiming he’ll make an announcement on Tuesday.  I guess they’re following the US Congress on that whole “deadline plus” definition of deadline.

And we have confirmation from the Virginia Pilot as well.

Virginia Beach Town Hall Meetings on Arena – Kings For Sure?

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Dec 192012

Town Hall

Apparently December 18th is a great day for town hall meetings in Virginia Beach.  They held one to discuss the proposed NBA/NHL arena.  The full presentation is linked to here and the short factsheet is here.  The followup news cycles have some pretty “volatile” comments going on too.

Too small a market you say ?  Check out these stats for “population per team” to see how they’re selling this.  Color me confused, I thought Seattle was saying it’s really difficult to make an arena/NBA business pencil out with only one anchor tenant.  How many concerts stop by VA Beach in a year to make up for no NHL team ?

Truly impressive, is the factsheet puts forward as “fact” that construction would generate 3,944 new jobs statewide plus the arena would generate 1,900 permanent new jobs.  I’m sure sports arenas have their inefficiencies, but if an 18k seat arena (which will probably be at half capacity most of the time) actually needs 1.9k people to run it, a 10:1 ratio of customers to employees, then this place is doomed.  Very few businesses can run at that sort of staff to customer ratio.

Va beach comparison

It’s the Kings, Says a Source

News10, based in Sacramento, has a story where some source in Virginia Beach (who wishes to remain anonymous) is confirming that the formal discussions with the “unnamed team” are with the Kings.  The video makes a big deal that all they’ve had until now have been rumors and unconfirmed sources.  Now they report based on a source, although anonymous and no idea if it’s confirmed.

Virginia Beach Arena Moving Forward

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Nov 282012

It looks like the Virginia Beach Arena plan is moving forward in VA.  Several articles   have been   published recently that report the city of Virginia Beach has reached a working agreement with Spectacor/Comcast and what is widely rumored to be the Sacramento Kings.  In comparison to the SoDo arena plan, this is something like the MOU negotiation phase although VA has an actual NBA team owner involved in the discussion.

Quick Summary

They’re planning a $350M arena to be owned by the city and leased by Comcast-Spectacor and Live Nation.  The City is supposed to be kicking in $195M, although I suspect it will be termed a “tax kickback” so it doesn’t sound like handing over a big bag of money.  The state is being asked for $150M in support of the arena.  Of that $150M, $70M would go towards arena construction, $30M would be to help pay the NBA relocation fee, and $50M would be used to cover other relocation expenses (like paying Sacramento off).  Comcast-Spectacor is supposed to be putting in $35M.

The predictions are that putting an NBA arena in Virginia Beach will essentially rain down massive floods of money to the region. Over a 30 year time-span they’re predicting $5.5B in visitor spending, state taxes of $330M, local taxes of $267M, and 1,900 jobs.  <saracasm>So 6,097M and 1,900 jobs sure sounds like a sure win for the public.</sarcasm>

Already one consultant report, given to state officials, concludes an arena with an NBA team in Virginia Beach could generate as much as $182 million in visitor spending each year, with the state alone taking in almost $11 million a year in tax dollars.

However, if you wonder if a city really can benefit from a professional sports team/new arena coming to town – our friend Geoffrey Propheter’s paper has pointed out that from 1995-2009 adding an NBA team/arena to a town without any other major pro sports is correlated with per capita income increases but no statistical conclusion could be made of multi-sport cities.  When just looking at the most recent NBA arenas (2001-2009) the arrival of the arena correlated with a per capita income reduction of $2,430.  While there weren’t enough modern arena examples to analyze single vs multi-sport cities it’s logical to look at the 1995-2009 result and conclude the decline would be worse for a multi-sport city like Seattle.

Kings Still Eyeing Virginia Beach, Not Seattle

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Nov 082012

The Virginia Beach NBA arena is not yet ready to take a back seat to the NBA season starting or Seattle rumors.  A new story was put out today.

A sketching of the Virginia Beach Arena proposed near the convention center.

By Aaron Applegate  The Virginian-Pilot  November 8, 2012
The proposal to build a $350 million arena near the Virginia Beach Oceanfront to attract an NBA team is moving forward with behind-the-scenes meetings. Mayor Will Sessoms said he plans to update the City Council on Tuesday.

A representative of an NBA team eyeing a move to Virginia Beach has had meetings in Richmond with Gov. Bob McDonnell and the city, according to Warren Harris, the city’s director of economic development.

Harris declined to say which team.

Two sources who were at a city department director meeting last Thursday said Harris gave a brief update on the arena and told the group that Sessoms and the governor had recently had meetings with the ownership of the Sacramento Kings and mentioned the Maloof family, which owns the team, by name.

Virginia Beach Arena Plan Launched in Feb 2011

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Sep 022012

For all the talk about “Virginia Beach plan not being far along” I would like to point out that more details are emerging.  Things may move quickly as the project is “fast-tracked for a vote by council in October or November.”

Virginia Beach has issued several contracts related to planning, the first being issued all the way back in February of 2011, nearly a year before the Seattle Arena plan became known.

They’ve already racked up nearly $700k in expenses out of 900k projected to the planning stage.

The authority has four contracts with HKS, a Dallas-based architecture and project management company, totaling $895,000. So far, $678,400 has been spent, said Warren Harris, the city’s director of economic development.

HKS has hired seven subcontractors to do work on the arena project, including public relations, marketing, coordination of negotiations with the NBA and NHL, formation of a local advocacy group, development of financing models, marketing studies for premium seating, naming rights and corporate sponsorships, public opinion research, and economic impact studies, including the one done by James V. Koch, an economics professor at Old Dominion University, according to the contracts.

Was the Virginia Beach group just much, much better at keeping a secret than Hansen’s team ?  Seattle’s arena plan started discussions during Summer 2011 and had racked up $600k in expenses by July 2012.


“We Built It” …  62% Publicly Financed

The RNC Convention was held at the Tampa Bay Times Forum, an arena constructed for the NHL in 1994 for $139M ($206M in 2012 dollars).  It’s a pretty impressive place by the sound of it:

Boasting unique features like lightning-throwing Tesla coils, an 11,000 square-foot Bud Light party deck with incredible views of the city and a massive five-manual, 105-rank digital pipe organ, the Tampa Bay Times Forum consistently ranks among the very best venues in the United States. The best part? This is only the beginning.

Actually, the public paid most of the bills for the Forum but it’s nice that the RNC paid $20M to renovate the Forum for their convention…. probably paid for by public/private donations rather than ticket sales.