Here in Sacramento a hot topic this year is whether to raise the sales tax to pay for a new arena for the Sacramento Kings.Â In a nutshell, $500 million will be raised to build an arena, the Kings’ owners will chip-in 10-15% of the initially estimated building costs, the public will pay for the inevitable cost overruns, and the Kings owners will keep all the profits from any event at the arena.Â In return, the Kings agree to stay in town for another 30 years.Â (No one has yet disclosed the inevitable loopholes and escape hatches that would let the Kings leave earlier).
Like it or not, that is the going rate to keep professional sports teams in all but the largest markets.
In November we will get to vote on this – sort of.
Sacramento County, which is notorious for overspending on wasteful projects and not caring too terribly much about its residents, which is why a significant part of the county is in revolt with new cities recently being incorporated in Elk Grove, Citrus Heights, and Rancho Cordova, is not putting on the ballot a $500 million proposal to keep the Kings in the area.
We will get a ONE BILLION DOLLAR sales tax proposal.Â $500 million for the Kings project, and another $500 in general revenue for the county to use as its wants.Â The county has not put forward any specific need for the money, nor specified any use for the money.
Many people are focused on extortion from the Kings owners to keep in the Kings in town.Â That’s nothing.Â The County Supervisors are extorting everyone to the tune of an extra $500,000,000 for themselves to keep the Kings in Sacramento.
To look at this from another perspective, in 2002 the Kings franchise was worth about $209 million.Â (Source: http://www.rodneyfort.com/PHSportsEcon/Common/OtherData/NBATeamValues/NBANSLI02.pdf).Â It is surely worth a few million more today, ballpark it at about $250 million.
For one billion dollars, why doesn’t Sacramento just buy the Kings and keep all the revenue from a new arena?Â With that hefty premium Sacramento could buy the Maloof’s continuing management of the team.Â Maybe even buy their casino.
It is a hard enough sell for some to use “public dollars for private interests.”Â That is a legitimate way to look at the transaction.Â On the other hand, one could say a legitimate use of public dollars is to bring a professional sports team to the area.
Critics sometimes think that every public dollar must be spent on the homeless and most vulnerable in society – irrespective of fault.Â That is not true.
But what must the Kings owners be thinking?Â They are needlessly increasing the risk that the voters will reject a new arena because Sacramento County Superivisors have porked an extra $500,000,000.00 onto the ballot proposal.