Maloofs saved city from financial mess

"Sacramento had only so much to dole out to private interests."

Let us breathe a sigh of relief that the city of Sacramento didn’t have enough cash to satisfy the big-time ambitions, self-interest, vanity and greed of the parties involved in pushing a new Kings arena.

Let us give thanks that the train racing toward a financial wreck has been stopped for the time being.

Let us give thanks that the children of Sacramento might not have their educational future mortgaged to a playground for millionaires.

Let us hope that we can begin to think realistically about building a stable local economy that will reduce unemployment and homelessness, increase social services and return our parks to decent condition.

And let us remember that the devil has a thousand disguises.

I was surprised that the Maloofs and the NBA wouldn’t settle for a donation of $255 million from the taxpayers of Sacramento.

I wasn’t surprised that NBA Commissioner David Stern washed his hands of the “deal that really wasn’t.” This is a man who has presided over a 30-fold increase in NBA revenue since he took over in 1984. He represents the owners and their financial interests, not good old River City.

I was surprised that it fell to the Maloofs to provide the economist who knocked down the  city’s house-of-cards funding plan and who exposed many unfunded infrastructure issues that would have fallen on the city.

I was disappointed that the Bee and other local media failed to provide this information months ago.

I was impressed that a grass-roots opposition movements arose to challenge Mayor Kevin Johnson and his City Council allies who were eager to raid the public treasury while denying residents a voice in how their money was spent.

I was disheartened that the Bee, the city’s only daily newspaper, undermined its credibility by becoming a major cheerleader for a new Kings arena. It  failed on its news pages  to seriously examine the issue of public funding of sports arenas, the economic projections of Think Big Sacramento and the experiences of midsized cities that played the stadium game. Worse, it used two columnists and its editorial page to pound out pro-arena  coverage while providing no in-house opposition voices. Whatever wall the paper may have between news and opinion doesn’t overcome the public perception of bias and favoritism.

In yesterday’s newspaper, we had a front-page reaction story that focused solely on Kings fans and political proponents of the arena. The first paragraph said:

The Kings return home to Power Balance Pavilion today to face a city stewing in a mix of scorn and disappointment.

Hey, about those thousands of Sacramentans who are relieved that the city didn’t plunge into a financial crisis? How about the local activists who have waging an unheralded grass-roots campaign to get a voice in how public money is spent. Why wasn’t there even a one-sentence quote from STOP, a group pushing an anti-arena ballot initiative?

Maybe soon, the Maloof bashing will stop. No matter how unintended, the Maloofs did the city a favor by pursuing their own financial gain and exposing the fact that Sacramento couldn’t satisfy their appetite for more, more, more.

This entry was posted in Sacramento arena and tagged , , , , . Bookmark the permalink.

12 Responses to Maloofs saved city from financial mess

  1. Frank in Modesto says:

    Well, some fabulously wealthy businessmen have decided it is worth it to privately finance and build a $500mm on Piers 30 and 32 in San Francisco. The storyline includes a recognition by the City officials seeing the project as a financial catalyst on a dilapidated property. Imagine that? A money making proposition wrapped up in an arena package that makes economic sense…at TWICE the price of what Sacramento was asked to do by leveraging parking lot assets. This is why San Francisco is a “can do” city and people want to invest there…people want to live there…and the economy is far more dynamic that Sacramento.

    As the saying goes, it takes money to make money. In Sacramento, the cynics are either afraid to invest or not savvy enough to recognize good civic investment…they just want to retrench and settle. When I reread this blog, I recognized both fear and lack of understanding.

    San Francisco benefits from a deep pocketed NBA ownership group, while Sacramento’s stuck with the heavily indebted Maloof’s in decline…so don’t even suggest the Maloof’s should do as Lacob and Gruber. But do recognize the cities large and small benefit from these kind of unique products, whether it is Santa Clara’s new 49ers stadium, or West Sac’s AAA ballpark for the River Cats and Modesto’s single A ballpark for the Nuts, or even Napa’s river front walk. See Denver…Indianapolis…Pittsburg…

    • Paul Clegg says:

      Frank, I wonder why some wealthy private investor didn’t see the wisdom of investing in Sacramento’s downtown.

  2. Frank in Modesto says:

    It’s perfectly understandable to be a cynic, and having a blog on a website is a perfectly fine place to voice your opinion, but what is your endgame Mr. Clegg? The way I see it, the City of Sacramento has invested in an asset (parking facilities) over the many decades, and it could have been argued, as you do above, that it was a raid on the public treasury, and the City should instead focus on “building a stable local economy that will reduce unemployment and homelessness, increase social services and return our parks to decent condition.” But, it is an asset of considerable value, is it not? It serves its purpose in the community…and it will remain an amenity enjoyed by many residents. Right?

    The City had an opportunity to parlay this parking amenity into another asset…a downtown arena. Its like trading your stock in Merck to buy shares of Apple. You can stand pat and do nothing, or you can look to the future, add an amenity and project economic growth. In the case of the new arena, it becomes an asset to the City, much like the parking garages. If the revenue proves to be insufficient, the City can sell the $391mm “asset” to AEG or some future Kings ownership group. So much for raiding the City coffers.

    Its good to have cynicism about government…City attorneys are almost always out matched by attorneys of millionaires. And, the millionaires’ economist can be a hired tool with persuassive insights, but his analysis is paid for. I trust the experience and opinions of the AEG, the NBA and the ICON Taylor Group, who have studied the market and details of the proposal far more intimately. Their business accumen is impeccable, compared to the faltering Maloofs. David Taylor has too much invested in Sacramento to screw the City or send it hurtling towards bankruptcy. They have “skin in the game,” as they say, and much to lose (compared to the UCLA professor).

    I gather you are passionate about basketball, but I am not convinced of your ability to assess the feasibility or financial outcome this deal had for taxpayers and the City Sacramento. Your rhetorical mention of the childrens’ educational future being mortgaged suggests you don’t know the difference between City budgets and public school financing. You are cynical about the City government successfully building an arena facility, but readily implore them to provide solutions to unemployment and homelessness. Huh? What happened to your healthy cynicism? Government doesn’t solve unemployment…private sector employers do. However, government can do infrasructure projects…like parking garages, new roads, and arenas…which become amenities that attract private employers.

    • Paul Clegg says:

      Thanks, Frank, for making your case. I would dispute your analogy that using city parking money is like investing in Merck or Apple, both reasonable investments. Using parking revenue to fund an arena is like investing in a penny stock — or giving it to the likes of Bernie Madoff.

      • Frank in Modesto says:

        Penny stock? By what measure? It’s brick and mortar…a tangible asset. It would be a unique facility for a large metropolitan area. All one needs to do is determine what the comparable value of a similar, new arena is in other cities of a similar demographic and population…and that isn’t Stockton. I believe the City could sell this new arena, if financially forced to, for $300mm-$400mm, depending on whether or not it has an anchor tenant that is one of a limited few NBA franchises. Not bad for a $255mm investment.

        • Paul Clegg says:

          If wishes were horses, beggars would ride, Frank. There are a lot of make-believe stats in the arena economic projections, and who says a Kings arena is the best use of public money?

          • Frank in Modesto says:

            I never made an argument that an arena was the best use of public money, so I am not sure what your riddle was trying to refute. However, you failed to counter my claim that such a facility would have a monetary value to investors, like AEG or another billionaire NBA franchise owner.

  3. Jason says:

    Mayor Johnson has spent his term on two things: strong mayor and the arena. He’s pursued these with great abandon and pushed them as solutions that would put Sacramento in the “big leagues.” He wanted strong mayor, later rebranded as executive mayor, on the ballot to let the people decide but putting the arena on the ballot was never an option, only to have pro-arena folks ask why need elected officials while they complain about not “getting to vote on the red rabbit sculpture at the airport.” The pro-arena folks seemed to forget California’s century-long tradition of direct democracy (despite it’s considerable flaws). But the problem with the arena and strong mayor is that they are big ticket issues that have taken up a lot of time and debate and they are not likely to yield the desired result. The arena has little or no economic benefit and will strong mayor give our city a balanced budget, improve services, or will strong mayor take us down to a city government that pushes professional management aside for cronyism and bossism- the two reasons why council-manager city government exist in the US? Mayor Johnson would be a better mayor if he focused more on day to day needs (balancing he budget, improving city services) rather than grandiose schemes that would do little to solve Sacramento’s problems.

  4. Richard M says:

    I’ve give you a major amen on this one. I’ve said it from day one when they started structuring this deal, “they can’t make it work and even if they do it’ll be bad for the city.” With that though, I’m not above some Maloof bashing. Sure they did the city a favor, however if they knew they weren’t going to be happy with the deal as structured why wait so long and do so much grandstanding? Why not come right out and say it before the meeting in Fla. when Stern handed the city a check.

    • Paul Clegg says:

      Thanks, Richard. But I’m not sure the Maloofs are the only ones speaking with forked tongues in this saga. I wonder whether we will ever hear about emails between the city and the NBA.

  5. Red Corvette says:

    Johnson, the Maloofs and the City Council members who voted for this Rube Goldberg deal all need to put on their tin foil hats and Power Balance bracelets.

Leave a Reply

Your email address will not be published.