Friday, March 9, 2012

Mayor KJ Scores to Save Kings and Create Jobs in Sacramento

It was just like he was back in his Phoenix Suns’ jersey. As a player, KJ was known for his fearlessness…challenging players almost twice his size.

This time, it wasn’t Hakeem Olajuwon standing between him and the basket during the 1994 playoffs. But, for the City of Sacramento and the fans of the Sacramento Kings, the opponent loomed just as large and a favorable outcome seemed unimaginable.
Guess, they didn’t see that shot…a one-handed, baseline, tomahawk dunk over Hakeem. And, didn’t realize they should never count out their Mayor. He did it again…this time for the win with literally no time left on the clock.

The Mayor greets fans after saving
the Kings from relocation
Mayor Kevin Johnson led the efforts to keep the Kings from relocating to Anaheim. This week after the City Council approved the plan to break ground on a new arena, Mayor Johnson said, “This is one of the finest moments in the city of Sacramento. I want to thank Gavin, Joe and George (Maloof) for embracing Sacramento and for allowing us to embrace them back. We have an eternal debt of gratitude to the Maloof family.”
It was a long haul to get to this point. The City had to prove to the NBA that they had a viable plan, including financing and fan support, among other things. And, they did just that. A few other facts that helped their case:
  • The Kings were No. 1 in overall ticket revenue in the off season (despite uncertainties of the lockout and the possibility of moving)
  • The Kings were No. 2 in group sales, which demonstrated deep community support
  • In December, the Kings had more new corporate partners than any other NBA team in the offseason and is still among the best
  • Attendance is up 7.4%
  • The Kings had 85% season ticket renewals and a 15% increase in season tickets, again one of the best in the NBA
After the final game last season, in what was thought to be the last game in Sacramento for the Kings, a sports writer commented that “So what might be the final NBA game in Sacramento turned out to be a metaphor for the team’s 26 years in town: a slow start, some thrilling moments, but in the end: heartbreak.”

Not so fast…no heartbreak in Sacramento. Instead joy…jobs…development…and an infusion of revenue.
And, a Mayor who is up for re-election this year. I think he just punched his ticket for 4 more years.

I talked to Jeremiah Jackson, project manager for this effort, the other day to learn more about how they saved the day.
PJ: So when did this effort to keep the Kings in Sacramento start?

Jeremiah: It dates back to last year’s All-Star weekend in LA. Rumors started that the Kings were moving to Anaheim. The Mayor found out these weren’t just rumors—it was true. So, our last-ditch effort to keep the team in Sacramento started there. The Mayor spoke at the NBA Board of Governors meeting last year. He pitched Sacramento. And, prior to this we raised $10 million in a week from new sponsors. We showed that there was untapped potential in the business community and community at large. The NBA was surprised there was this much untapped sponsorship available, especially with no Fortune 500 companies in Sacramento.

Sacramento has stood behind their team, even through the years when they haven’t made the playoffs. The Mayor got a standing ovation for his presentation from the owners—this never happens.
The NBA gave us a year—until March 1, 2012. If we did not have a credible plan in place, the NBA would not object to the Kings moving.

PJ: What came next?

Jeremiah: The Mayor created a “Think Big” committee and worked 100 days—from Memorial Day to Labor Day—digging into options for the city, both public and private, tied to the users of the facility…looking at ways to bring in revenues from ticket surcharges to digital marketing.

On September 8 we presented the framework for the financing plan. Since then, we’ve worked through the legal and financial liability for everything that was laid out in that report.
PJ: I believe it may be unprecedented for a City to keep an NBA team once they have announced they are thinking of relocating. With no blueprint to go from, how difficult was it to develop this framework?

Jeremiah: We only had 10 or 11 months to go from 0 to 100 in our structure, so it was important to have a clean timeline and framework. We had to be unique. This is always a difficult situation, no matter what. It is especially tough in California and it is tough time for municipalities right now. We had to think creatively. This would be the cornerstone of economic development for our downtown. We project we will create 4,100 jobs directly related to the arena itself. Not spinoff jobs to build the arena. And, we will bring in $7 billion in economic activity over the next 30 years.

The question was…how to do this with no public tax dollars. The voters had voted ‘No’ to a tax hike in 2006, so we had to look elsewhere. We needed a unique financial model without putting city funding at risk or raising taxes.
PJ: So, what does the plan look like?

Jeremiah: What is unique about Sacramento is the Downtown Railyards. It was the original end of the Transcontinental Railroad. It is 244 acres of undeveloped land adjacent to downtown. The Federal government is giving more than $200 million for an intermodal transportation hub. It will be like the West Coast Grand Central Station and Madison Square Garden. This hub will link the entire region through the transportation system. It will have a bold impact on Sacramento.

On the financing side…90% of the city’s funds will come from parking leases and city parking garages. And, selling the land where the current arena stands. The Maloofs [owners of the Kings] are putting $73 million upfront and AEG [one of the leading sports and entertainment presenters in the world], is adding just under $59 million up front.
PJ: What were the linchpins in accomplishing this?

Jeremiah: One…the community support was critical. Even when they thought the team would leave, fans stayed at the arena last year after games and chanted…for an hour [“here we stay.” “Sac-ra-men-to”].

Two…is the Mayor…his leadership on this and his relationship with NBA Commissioner David Stern. They have known each other for decades. This relationship enabled us to stay in the game when he let the Mayor present to the Board of Governors. In addition, the Mayor’s relationship with the CEO of AEG Tim Leiweke, was key to getting this done. The Mayor put together the Think Big task force, which pulled together local elected officials and others in the community; our small staff was working on this; and then there was City of Sacramento consultant Dan Barrett, who crunched the numbers.
Three…is the Maloofs…they could have applied for relocation last year and in the final moments they stepped up with an upfront investment. This was integral and we are appreciative of them stepping up at the right time.

PJ: Where do you go from here?
Jeremiah: Over the next 30 days we will get the pre-development agreement set and start the design. The environmental review should be completed by November. In April 2013 we will start construction and it will be completed in August of 2015, opening in Sept. 2015 for the NBA season.

PJ: What does this mean for the City of Sacramento?
Jeremiah: We knew it was big for Sacramento. Sometimes, as a City, we get bogged down in being against things. We knew people wanted to be “for” something. Especially at this time in our country, we knew we had to ‘think big, be big, and act big.’

This is a transformation. It’s about the future, it’s about jobs. It’s a big project and it’s the time to do this. It’s about now.
There were several attempts to build a new arena pre-dating this Mayor. To get where we are is almost surreal. When the City Council approved this [earlier this week], people we’re overjoyed. They did not know this time would come.