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If the stadium was generating profits year round, why didn't either Ranadive nor Maloofs want to own this profit center? The reality is that the Arena is going to be losing money year round, that is why the City of Sacramento was brought in to absorb the losses from operating the arena. This is why they are raiding the parking meter fees to pay for the Arena.
But look at what events are scheduled right now for Sleep Train Arena. Its mostly just home basketball games, otherwise, the arena is mostly empty most days of the week for most of the day. In Novermber there are currently only six events other than Kings games scheduled for the entire month and only 5 Kings home games. Moving the Arena to a new location downtown isn't going to magically turn that around.
Right now even during the Kings regular season, Sleep Train Arena is mostly empty most of the day, most days of the month. That means you have a large dead space in the middle of downtown that is mostly empty most of the day for most of days of the month even during the Kings regular season. When the Kings regular season is over, there will be even less activity at the arena.
Dude.....seriously. How many times do I have to explain the concept of an investment?? Should I just cut, paste and repost it here like 10 times? Why should I buy a home and rent it out? I mean, I'll lose money each yr, right?....But when I SELL the home, I realize all of the appreciation I gained by holding it.
You just keep reposting the same things over and over with no actual working examples to back it up. You don't even seem to understand basic ecinomuc theory or principles if investing. You are simply making up your own theories and repeating them in each response.
Why doesn't Ranadive want to own the stadium? Why the hell should he own and operate a stadium yr round while the city reaps all of the economic benefits? We are not debating whether the actual STADIUM will report a profit, but rather the extent to which it will effect the downtown micro economy. For at least the 2nd time, I'll reapeat: private investors have already bought property in downtown as a result of the stadium. Landlords are already experiencing gains. Construction companies are profiting. Whether you choose to acknowlwdge it or not, the stadium IS ALREADY IMPACTING the downtown economy. Would you purchase and asset if it benefitted someone else?? There is your answer to your Ranadive question (one of many reasons)
I guess we'll have to disagree and wait in the outcome.
Coming from someone who used to live about 10 blocks away from KeyArena back when they had the SuperSonics and whose been back a few times with enough time in between visits to see the changes, that's pretty funny. Changing the price on parking meters probably had a bigger real world impact than losing the SuperSonics.
What is really funny is reading someone post anectdotal evidence in contradiction of business owners who publicly stated that they had to roll up shop and leave Seattle Center because of the revenue that the Sonics took with them when they left. There is an entire article in the SeattlePI with quotes from such small business owners. You should contact them and tell them that they're wrong, because you use to live there and you know better.
Takes not much thought to understand: A business deals with insurance costs, taxes of all sorts (payroll, income), utility costs, wages, liscencing fees, interest expense, rents that are often sky high, on and on. A lot of them are barely scraping by as it is. Even a slight dip in cash flow can sink many of these businesses. Now you see why the exodus of 20,000+ people 41+ nights a yr completely tanks the business.
Ironically, on my visit to Denver a couple of yrs ago I read an article in the Denver post with small business owners stating the EXACT same thing; that the basketball strike was killing their revenue and if it did not end soon, they'd have to leave.
Or you could do like I suggest and contact the business owners via email and explain to them how you better because you use to live there. Start the subject line with "LOL...why did you leave?"
That's great that Sleep Train hosted yr round. The only problem is that no one has any reason to go out to Natomas, there is no business out there, no transportation and it's not walkable.
In direct contrast to Natomas is downtown, which is the center for most business in this area, is walkable, has public transportation and is within walking distance to what is by far the most densely packed urban area in the Central Valley - midtown.
Natomas had zero foot traffic. Midtown has a ton (and even downtown has its share M-F at lunch, 5 pm). Safe to say that whatever businesses spring up around the stadium will experience significantly more foot traffic after basketball season than any small business in Natomas ever did. They will do just fine.
What is really funny is reading someone post anectdotal evidence in contradiction of business owners who publicly stated that they had to roll up shop and leave Seattle Center because of the revenue that the Sonics took with them when they left. There is an entire article in the SeattlePI with quotes from such small business owners. You should contact them and tell them that they're wrong, because you use to live there and you know better.
Takes not much thought to understand: A business deals with insurance costs, taxes of all sorts (payroll, income), utility costs, wages, liscencing fees, interest expense, rents that are often sky high, on and on. A lot of them are barely scraping by as it is. Even a slight dip in cash flow can sink many of these businesses. Now you see why the exodus of 20,000+ people 41+ nights a yr completely tanks the business.
Ironically, on my visit to Denver a couple of yrs ago I read an article in the Denver post with small business owners stating the EXACT same thing; that the basketball strike was killing their revenue and if it did not end soon, they'd have to leave.
Or you could do like I suggest and contact the business owners via email and explain to them how you better because you use to live there. Start the subject line with "LOL...why did you leave?"
No biggie.
Capitalism requires businesses fold and go under anyway, so while a few anecdotal stories about businesses rolling up their sleeves is great, the facts paint a different story.
I don't dispute that some businesses may have gone out of business. For example, if you ran a shop selling Sonics merchandise, yeah, you probably went out of business. Maybe a Sonics sports bar went out of business or something. Marginal clingers-on may have gone out of businesses, but that's not of any public policy consequence. Likewise you had restaurants complaining about parking hurting their bottom line of restaurants was improving.
Again, same deal. It's basically Nasem Talib's antifragile principle in practice. The fragility of the individual restaurants is a requisite of a healthy, robust restaurant industry.
Capitalism requires businesses fold and go under anyway, so while a few anecdotal stories about businesses rolling up their sleeves is great, the facts paint a different story.
I don't dispute that some businesses may have gone out of business. For example, if you ran a shop selling Sonics merchandise, yeah, you probably went out of business. Maybe a Sonics sports bar went out of business or something. Marginal clingers-on may have gone out of businesses, but that's not of any public policy consequence. Likewise you had restaurants complaining about parking hurting their bottom line of restaurants was improving.
Again, same deal. It's basically Nasem Talib's antifragile principle in practice. The fragility of the individual restaurants is a requisite of a healthy, robust restaurant industry.
It's pretty simple. More people = more dollars spent. Debating this is like looking up at the sky and debating whether it's blue. Doesn't take an economics genius to see that you add or subtract thousands of people from an area business is either going to increase or decrease. The idea that "it's only 41 nights per yr" is hokey and corny and not grounded in any sort of logic whatsoever. There are endless examples of urban stadiums completely transforming an area. I already listed them and not about to do it again fot a 5th or 6th time.
This is a pointless debate. Do you seriously think an investor like Ranadive is goung to pour over $400 mil in an invesrment that is bound to fail? The stadium is going to flop, no one is going to show up and no one is going to spend money around it? That he is planning to build a hotel around the stadium that will sit dormant? That several investors have already purchased commercial properties in downtown for renovation because they know they'll never lease them out? Again, email these investors and explain that you know better. Tell them maybe a little Kings' apparrel store or a bar may spring up (call it a "Kings" bar) but they really all just wasted millions.
Think about how many millions of dollars investors have spent DIRECTLY because of the impact they believe this stadium will have on the area. Seriously, consider that.
I feel like I am talking with crazy people here lol.
You do realize that Ranadive and other investors can make a positive return off of this investment but the city could still lose money, right? They don't depend on the same variables--the private investors' risk is reduced because of the money the city has spent subsidizing the project, but the public return is based on other factors, including parking and tax revenue. The public and private parties share different factors of risk, which is one of the reasons for concerns about this particular financing model; the risk factors between public and private partners didn't seem equitable.
Yes the City of Sacramento is likely to lose money on this deal. But wasn't the City of Sacramento likely to lose money on whatever it did to come up with a new use for the Downtown Plaza site? I mean if the City of Sacramento was just looking to keep the Kings in Sacramento in the cheapest fashion possible, they could have spent far less to build a new arena in Natomas at the existing location. A big part of the extra expenditures was also to pay for doing something about the former Downtown Plaza location.
You do realize that Ranadive and other investors can make a positive return off of this investment but the city could still lose money, right? They don't depend on the same variables--the private investors' risk is reduced because of the money the city has spent subsidizing the project, but the public return is based on other factors, including parking and tax revenue. The public and private parties share different factors of risk, which is one of the reasons for concerns about this particular financing model; the risk factors between public and private partners didn't seem equitable.
I agree with you for the most part, but that's mitigated by some extent by the fact that Ranadive and Co does have a big interest in the making the area desirable, both for his "ancillary" develop and people attending the events. The lease payments also involve a ticket surcharge, which align the interest of both parties. Definitely not perfect, but very different than saying that all the variables for each party are independent.
Yes the City of Sacramento is likely to lose money on this deal. But wasn't the City of Sacramento likely to lose money on whatever it did to come up with a new use for the Downtown Plaza site? I mean if the City of Sacramento was just looking to keep the Kings in Sacramento in the cheapest fashion possible, they could have spent far less to build a new arena in Natomas at the existing location. A big part of the extra expenditures was also to pay for doing something about the former Downtown Plaza location.
No, the city didn't own the arena site, so they were not necessarily going to lose money on whatever use JMA had in mind other than an arena. The city was already making $9 million per year profits from parking revenue, and considering changes to minimum parking requirements and already-in-the-works plans for parking modernization, were likely to continue making more. The loss of city parking assets (such as the basement garages) means much of that revenue is no longer available to generate money, and while an arena will increase parking demand during certain hours and days, it may not be enough (even combined with ticket surcharges) to meet the demand, which means that other money the city already collects as taxes (the TOT used to support the Convention Center and Community Center) will get pulled aside to cover the loan payments on the city's new debt to Goldman Sachs.
Overall, as I have said repeatedly, the idea of an arena, or a downtown arena, isn't the problem--it is the level of debt that we've attached to the city budget, and the hole it will blow in said budget should parking and ticket revenue fail to meet up to expectations.
Quote:
Originally Posted by ryuns
I agree with you for the most part, but that's mitigated by some extent by the fact that Ranadive and Co does have a big interest in the making the area desirable, both for his "ancillary" develop and people attending the events. The lease payments also involve a ticket surcharge, which align the interest of both parties. Definitely not perfect, but very different than saying that all the variables for each party are independent.
Ranadive & Co. could certainly succeed in making the area desirable and realizing a profit on the ancillary development, but the city could still end up losing money on the bargain. The variables for each party are not entirely independent of each other, but the city's risk profile involves much more exposure than Ranadive's--we borrowed a lot of money in order to take on that risk. And many arena supporters simply refuse to acknowledge the fact that taking risks includes the possibility of failure, either because they believe that faith will propel them to success the same way their faith in the Kings will propel them to a championship, or they think negative intentions will make thetans stick to their bodies. The ticket surcharge, even in the very optimistic city projections, doesn't come close to making up for the lost parking revenue, and a ticket surcharge changes the demand curve for tickets. The higher the ticket surcharge, the fewer people buy tickets.
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