Tuesday, May 7, 2013

Some updated thoughts on the Sacramento Kings' Deal

The news broke yesterday that the prospective new Sacramento Kings' owners agreed to give up their revenue sharing benefits when a new arena is built.

The precedent of that concession seems huge for the NBA, as this revenue sharing agreement was one of the key issues in the 2011 NBA lockout, and was a big deal for the players association.  The report I read said the NBA negotiated this with the group making the bid to keep the team in Sacramento that it just didn't come out of the blue.  While the initial reaction is that it is a vote of confidence in the Sacramento market by Vivek Ranadive and his ownership group, and it is, it also seems like it could be a back door way for the NBA owners to try to take apart pieces of the 2011 collective bargaining agreement that they don't like.  I would be interested to know if the players association has a point of view on this development.

I have also taken another look at the arena deal as some more details have been trickling out on the envisioned financing structure (i.e. interest only 8 years on the parking bond) and I wasn't aware of the value of the billboards given away and some other terms.  It is still better than last year's deal, but I think my initial estimate of a $4-8 million annual toll on Sacramento's general fund was too low, and it is probably more like $8-12 million.  The city does get some benefit for that investment, and it is a close call on whether it is worth it to the city.

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