SBD/March 21, 2012/Facilities

AEG Commits To Sacramento Arena, Will Receive Profits From Non-Kings Events

AEG would run arena, book all non-Kings events and collect most profits
AEG “had plenty of reasons to pass on investing $58.75 million in Sacramento's proposed downtown arena,” but the group “committed to the arena anyway, reasoning that Sacramento is a long-neglected market that has nowhere to go but up,” according to Kasler, Lillis & Bizjak in a front-page piece for the SACRAMENTO BEE. AEG President & CEO Tim Leiweke said, “We think we timed the economy perfect." While all sides have agreed to a non-binding term sheet, yesterday marked “a key moment in negotiations that will play out over the next several months to forge a more definitive series of documents.” In return for its investment, AEG “would run the Sacramento building, book all the non-Kings events and collect most of the profits.” The city would also get a share, “which it estimates at about $1 million a year.” Leiweke said that the Sacramento project “would be his company's first new arena since the recession started.” Leiweke: “It's telling that we have this much faith in the marketplace. We're willing to bet on this community." He added that AEG “ignored at least 40 other arena proposals in other cities.” Leiweke said that he met with Kings Owners the Maloof family yesterday and told them the team's performance “will be vital to the arena's profitability.” Leiweke: "We're betting on the three of you. We need a good team." He also said that AEG has “already talked to a half dozen companies about the building's naming rights, which could go for as much as $6 million a year.” That revenue would be “split between AEG and the Kings and would represent a greater payday than the team's current deal with Power Balance” (SACRAMENTO BEE, 3/21).

CALIFORNIA POLITICS:'s J.A. Adande writes sometimes “there’s a benefit to fitting into the grander scheme, and there just may be enough agendas in play that the byproduct will be keeping the Kings in Sacramento.” NBA Commissioner David Stern “wants to halt franchise movement" and AEG “wants to protect its local turf while adding new arenas to its concert promotion business while staying on the good side of the California state politicians it needs to get a football stadium built in Los Angeles.” AEG could “add to its California footprint if it’s successful in its bid to operate the Oracle arena in Oakland” that currently houses the Warriors and the adjacent stadium that’s home to the Raiders and A’s. Adande writes there is “much left to be done in Sacramento.” The story “won't be over until the shovels hit the dirt” (, 3/21). In Sacramento, Marcos Breton writes Mayor Kevin Johnson got Stern “to take Sacramento seriously and AEG to see Sacramento as a good bet.” Johnson used his connections with Stern and Leiweke “to tilt negotiating leverage away from the Kings owners, who once ran roughshod over the mayor's political predecessors.” Breton: “It's his gift. The native son and former NBA star learned long ago to use his celebrity as entrée to rich and powerful people” (SACRAMENTO BEE, 3/21).

SHOWING SOME OPPOSITION: In Sacramento, Tony Bizjak reports a local group called Sacramento Taxpayers Opposed to Pork are calling the city's downtown arena plan “a bad deal" and intend to “launch a petition drive to put the issue on the November ballot.” Members said that they “intend to file a petition for approval this week with the City Clerk's Office, and hope to gather 30,000-plus signatures by an end-of-May deadline” (SACRAMENTO BEE, 3/21).
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