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Arena Report: $387 Million

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By: Carmichael Dave – KHTK Staff Writer

Key details are emerging on Tomorrow’s report by the ICON-Taylor Group to Mayor Kevin Johnson and the Sacramento City Council regarding the feasibility of a new Entertainment and Sports Complex.

For starters, a new sports and entertainment complex built at the downtown railyards comes with a 387 million dollar price tag. Those costs break down to 241 million in construction jobs, and 146 million in soft costs, according to the layout obtained by KHTK.

The report states that the new arena will create 4,100 new construction and permanent jobs throughout the region, bring in 556 million in new spending during construction, and 25 million in annual spending during ongoing operations.

Local government agencies will receive 2.3 million in new revenue during construction, and 775 thousand annually during ongoing operation.

It was also stated that there will be significant expansion of arts, cultural, civic and entertainment amenities currently limited by the substandard Natomas facility.

As expected, the downtown railyards are the preferred destination. The report explains that the new arena can physically fit at the railyard site, which also offers the greatest potential to create jobs, activate downtown, and enhance transit connectivity. While the Natomas site would also be feasible, it would leave Sacramento as one of only three NBA cities with arenas not based in downtown areas.

When asked about infrastructure necessary for a downtown facility, sources close to the analysis said that those monies are expected to be funded through other sources, such as state and federal infrastructure grants .

As far as the arena details themselves:

  1. 1,300 additional seats for NBA games
  2. 44 additional luxury suites
  3. 1,368 additional premium and club seats
  4. High-resolution scoreboard and LCD flat screen displays
  5. Additional lounges, kid zone, food and retail facilities
  6. Event facilities and operations support to accommodate top concerts, shows, and other events

Surprisingly, when asked how much cheaper it would be to build the arena in Natomas, KHTK was informed that it would be only 1.3 percent cheaper, which comes out to just over 5 million.

The review was put together to be tailored to the Sacramento market, which included a review of comparable NBA markets as well. It was also noted that additional refinements to the revenue model may occur as more Kings specific data is incorporated into the analysis.

While the major question of how the project would be funded wasn’t answered, it was addressed via comparable arenas and their funding methods, a road arena proponents are sure to follow. Using 5 arenas (San Antonio, Kansas City, Orlando, Memphis, and the proposed Edmonton, Canada facility) as examples, funding mechanisms all showed both public and private funding. Private sources ranged from private operators, team rent payments, ticket surcharges, and overall bulk team contributions. Public sources included hotel and rental car taxes, arena sales taxes, and provincial contributions.

The three major steps to the project were also outlined:

  1. Present the proposal to the city and region this Thursday
  2. A 100 day review process, including technical review, launching a regional contribution, and developing a public-private funding plan.
  3. Beginning design process, securing funding prior to the March 1st deadline, and completing the entire project by May of 2015, less than 4 years from now.

The ICON-Taylor group in led by Sacramento development firm David Taylor Interests. ICON has had phenomenal success in building entertainment and sports complexes, including 11 arenas and 9 stadiums in the last 10 years.

It was pointed out, according to the report, that due to the fact that the Kings financial data was acquired 80 days into the analysis, there was only financing models identified, and not a specific financing plan.

Now the city will move forward in identifying specific financing structures, working with other entities within the “metropolitan area”.

Also to be addressed: a practice facility for the Kings, as well as parking. It was said that much of the parking will be handled by surrounding garages, which boast over 8 thousand spaces within a half mile. Whether or not preferred parking would be on-site in addition to the surrounding spaces is still to be determined.

During the 100 day technical review process to follow, the city manager will assemble a group of local city leaders to coordinate with the Kings, the NBA, private sector partners, and the state, as well as assist in the review process itself.

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