Maloofs' Letter to Season Ticket Holders

[ZZE916]

Thank you for all of your support as one of our most loyal and valuable customers. We want to share some facts with you directly.

As you are no doubt aware, we successfully negotiated an agreement with the city and county this summer after many months of very hard work. One of the key elements of those successful negotiations was the promise from the city and county that we would go "arm-in-arm" to the developer of the Railyards in order to secure his agreement with the terms of our deal.

We were surprised and disappointed in our three-way meeting with the developer last week. The developer refused to accept key deal terms we had negotiated, including basic points like the 8 1/2 acres needed for the arena based on the average of what has been done in Memphis, Charlotte, Houston and Indianapolis (the developer said he would only make 5 acres available) and parking for the events at the arena (the developer said that he would control all of the event parking for the general public). In order to get fans of all events comfortable with going downtown, we must make sure that they know there will be sufficient safe and available parking there.

We expected our partners, the city and county, to have made it clear to the developer that they expected him to honor our arena agreement. Instead, the city and county negotiators agreed with the developer's positions and began to renegotiate with us.

We are not willing to renegotiate what we've already agreed upon.

After 7-plus years in Sacramento, we believe we have demonstrated our commitment to the fans and the community – the quality of the teams we've built, the $11 million we've donated to community charities, the countless civic and community events we've sponsored. It is disappointing that a developer whom we've never met and has no history here could demand that our agreement with the city and county be set aside and renegotiated. What angers us isn't that the developer would try, but that our public partners would place his interests ahead of what they have already agreed to.

This developer, like most, has deals going around the country. He hasn't even closed escrow on the property to demonstrate his long-term commitment. We have agreed to a 30-year lease. For him, failure at the Railyards means very little. He can move on to his other projects. For us, failure at the Railyards would mean everything. We and Sacramento only have one chance at this.

We're the only ones involved in this process who have to live with the outcome for 30 years – the developer will make his money in the first few years and be gone, the government officials will all be retired and gone, the reporters will all be retired and gone.

Our family will still be here. So, we have to apply much longer term thinking to what gets built, what the deal terms are, and what a bad deal will mean to us for the rest of our lives – when the economy goes bad, the impacts of shoddy development around the arena, the infrastructure that needs to be in place, etc. 15, 20 and 25 years from now, it will be our business that is affected, not the developer's.

The Bee editorialized on the importance of completing the MOU before people vote. They warn the public about "bait and switch" tactics.

We agree. We will not be party to any arrangement where the public votes on one thing and ends up with something else. Who will the community blame – a developer who has left town – or us?

We are very grateful for all of your support. Please do not hesitate to give us your feedback.

Joe Maloof
Gavin Maloof

 

[BMiller52]

So wait now that we know there won't be a new arena built what's going to happen?

 

[ZZE916]

We sit and wait, I suppose...

 

[Warhawk]

So wait now that we know there won't be a new arena built what's going to happen?

OK, I again wonder where this type of comment comes from. Are you just assuming the deal won't pass, or are you drawing a concrete conclusion from the contents of the letter?

 

[VF21]

So wait now that we know there won't be a new arena built what's going to happen?

We don't know any such thing.

 

[Jerryaki]

i skimmed the bee article that came out the other day. if what the maloofs are claiming is in fact true (that the developer changed the conditions after the agreement was had), and then the city sided with the developer, i'd have to agree with them (maloofs) on principle.

i know a few people here didn't think a few hundred/thousand parking spaces was a big deal, but if it was initially agreed upon, then that's what the developer and city should stick with.

 

[BMiller52]

OK, I again wonder where this type of comment comes from. Are you just assuming the deal won't pass, or are you drawing a concrete conclusion from the contents of the letter?

Well actually I'm just coming to an assumption but now we know the Maloofs have a beef with this developer(or it seems like it) and they're pissed at the city too. They quit arena talks and I don't see an arena being built if they're not there to talk/negotiate about it... Basically what I wanna know is what happens to the Kings if this happens they way I think it unfortunately will. They move right?

 

[VF21]

BMiller52 - You are reading WAY too much into things. And for the gazillionth time, the Maloofs are trying very hard to make it clear they do NOT want to move.

And if you are going to say you hate the Maloofs, shame on you. Instead of assuming they're the bad guys, why not look at all they have done? I get upset with them - at times - but it's generally because of a lack of information.

The Maloofs are fantastic owners. They are being put in an impossible situation here. The Bee has, for a long time, acted as though they were the villians when actually, time and time again, it has not been true. They are trying to conduct a multi-million dollar business deal. Read the article in today's Bee CAREFULLY. Look at what the Maloofs are saying.

What you're seeing above is the Maloofs saying they're going to play hardball about getting the city to hold the developer to what was already agreed to ... that happens all the time in big business.

 

[bibbinator]

IIRC it took 20 years to get the Giants a stadium, I might be off by a few years but I know it took a long time. The people of SF didn't want to layout public moneys to build the new stadium. It finally got approved with private full private financing.

These sorts of deals require patience, hopefully the Maloofs and NBA will have it.

 

[BMiller52]

BMiller52 - You are reading WAY too much into things. And for the gazillionth time, the Maloofs are trying very hard to make it clear they do NOT want to move.

And if you are going to say you hate the Maloofs, shame on you. Instead of assuming they're the bad guys, why not look at all they have done? I get upset with them - at times - but it's generally because of a lack of information.

The Maloofs are fantastic owners. They are being put in an impossible situation here. The Bee has, for a long time, acted as though they were the villians when actually, time and time again, it has not been true. They are trying to conduct a multi-million dollar business deal. Read the article in today's Bee CAREFULLY. Look at what the Maloofs are saying.

What you're seeing above is the Maloofs saying they're going to play hardball about getting the city to hold the developer to what was already agreed to ... that happens all the time in big business.

Nah I don't really hate them it's just venting I put up there before I found out the whole story. I guess I see what you're saying but dang, this is really not the time for them to be playing hardball. Should've been done before IMO but I guess it couldn't be.

 

[kennadog]

This developer, like most, has deals going around the country. He hasn't even closed escrow on the property to demonstrate his long-term commitment. We have agreed to a 30-year lease. For him, failure at the Railyards means very little. He can move on to his other projects. For us, failure at the Railyards would mean everything. We and Sacramento only have one chance at this.

We're the only ones involved in this process who have to live with the outcome for 30 years – the developer will make his money in the first few years and be gone, the government officials will all be retired and gone, the reporters will all be retired and gone.

I've worked with developers (and city/county governments) all the time and this is absolutely true. A developer builds, collects their profit and is gone. They have absolutely NO investment in whether a project actually works or is financially feasible for the long run. That's up to whoever buys what gets built.

This would only be not true if the developer plans on being a long-term owner of part or all of the project. Buzz Oates comes to mind. I'll gurantee he doesn't build unless he's pretty darn sure its going to be profitable over the long term.

A developer built the old, disastrous K Street Mall, now torn out, and didn't lose a dime, nor cared about its failure. They were long gone. They got their bucks.

The railyard developer is from out of town, too. Build, collect profit and leave.

 

[rings4Kings]

Nah I don't really hate them it's just venting I put up there before I found out the whole story. I guess I see what you're saying but dang, this is really not the time for them to be playing hardball. Should've been done before IMO but I guess it couldn't be.

I disagree with this statement. Now is the best time for them to "play hardball". You shouldn't negotiate a deal after the deal is done (unless you're in government... or T.O). I'm not sticking up for them, but they are businessmen. They have the impossible task of balancing what is the best thing to do from a business stand point, and what the fans want them to do.

 

[Packt]

This clears things up. The Maloofs and the city had a vision, the future owners of the site has another. The Maloofs expected the city to use their clout to make their vision happen, but instead the city sides with the future land owners. The Maloofs feel betrayed.

This is a power struggle, and it will get nasty.

 

[kennadog]

I disagree with this statement. Now is the best time for them to "play hardball". You shouldn't negotiate a deal after the deal is done (unless you're in government... or T.O). I'm not sticking up for them, but they are businessmen. They have the impossible task of balancing what is the best thing to do from a business stand point, and what the fans want them to do.

Completely agree. The fans don't have to make the business of MSE work and neither does the City/County. The City/County will get the rent every year, regardless of whether MSE loses money that year or not. And the Maloofs are conservatively estimating losses 15 out of 30 years. They've lost money 5 out of the last 8 years.

If we were in a market like LA, NY, SF, Chicago, etc., some of the things the Maloofs want wouldn't be so crucial. Unfortunately, Sac is samll-market and has little corporate base. Far less possibilites for revenue for MSE here. That's just the way it is.

 

[Arena Skeptic]

Once again, I reiterate the point that Joe and Gavin are factually wrong on at least one count. The MOU on the County's website says 5,000-6,000 parking spots within a 10 minute walk of the arena. Joe now wants 8,000.

Take a look in this document,

http://www.ceo.saccounty.net/pio/information/docs/ATT-1-Basic-Terms.pdf

Point 12.b.

How can the Maloofs now demand 8,000 spots, and then tell us that the County violated the MOU?

 

[Kingsgurl]

I would think 12 D would be more relevant than the actual number of spaces.
I would also think that the fact that the proposed Arena acerage went from over 8 (which was what worked in all those other cities) to far less is also a major sticking point. (That would be ALL of point 10 in the document you referenced) As it should be. An agreement was struck.

 

[Arena Skeptic]

Kingsgurl, I wholeheartedly agree.

Now, the deal is, with some fairly vague wording in there, such as "adequate acreage", we can see that what they're asking us to vote on is imprecise and subject to interpretation. I've never had the opportunity to vote for or against anything this vague.

That just seems like a bad idea to me, whether I'm "for" it or "against" it. I put for and against in air-finger-quotes because, in reality, none of us is really sure what we're voting for or against. It's an article of faith, one way or the other.

It's almost like every single point could possibly be litigated. What does "Adequate" mean? What does "5,000-6,000" mean? What does ANY of it mean?

Our leaders have failed us. They failed to bring back an agreement worth voting on. No, not for or against, but voting on one way or the other at all.

It's half-backed, and we have no idea if it's a lasagna, a banana-cream pie or a pineapple turnover.

I think both sides are wrong here, and now everyone's waking up to this. And the result is, this is going to lose. Lose huge.

I'm sorry, but they didn't spend enough time assembling this. I really think this is now a lame-duck team, and I don't even blame the Maloofs. Correction: I don't blame ONLY the Maloofs. Fong, Steinberg and Dickinson are also to blame. Fargo. And the list goes on.

This has been a hard week for proponents of this deal. I could have been a proponent of A deal, but not this one. I think it's too one-sided.

And as this http://www.pitch.com/Issues/2006-09-07/news/feature.html points out, proceeding with this plan without an anchor tennant is probably not the best course of action.

I think the City should buy the arena from the Maloofs and renovate it. It's good enough for CIF, ice shows, the circus, concerts, etc. It may or may not be good enough for the NBA.

I do have one substantive question: If the interpretations of "what the City wants" and "what the Maloofs want" is SOOO different, then how did they ever reach an agreement on project costs? Maloofs want a flat lot with 8,000 spaces; City wants a garage. So how'd they agree to a final cost estimate? This has "Overruns" written all. over. it. Where's that money supposed to come from? The "other" $600 million? County general fund?

$470-$542 million was an irresponsible WAG, and guess who gets to pay for it when it comes in at $650 million instead? Streets? Cops? Parks? Who knows?

Risky, imprecise, sloppy, subject to litigation, possibly illegal... Man. This deal is NOT solid, and never was.

And I'm not even against a new arena in the railyard.

 

[RS189]

atleast if the people dont vote for the new area, they get to regret the consequences....too bad for the fans in the area though

 

[Kingsgurl]

$470-$542 million was an irresponsible WAG, and guess who gets to pay for it when it comes in at $650 million instead? Streets? Cops? Parks? Who knows?

I can't say that their estimations are off, at this point, and if it DID happen to come in over budget, no one would be stealing money from parks or cops or streets to pay for it, since all this extra revenue for those things would actually be generated by this measure. This measure will still benefit those areas, even with these current issues.

I would agree that they should have hammered out more concrete details with the developer before moving forward. Unfortunately, the timing of the ballot precluded that. It is what it is. I think the Maloofs and the city should hold to what was origianally agreed upon, and together, they should stand up to the developer

 

[Warhawk]

I would agree that they should have hammered out more concrete details with the developer before moving forward. Unfortunately, the timing of the ballot precluded that. It is what it is. I think the Maloofs and the city should hold to what was origianally agreed upon, and together, they should stand up to the developer

No, the city/county precluded that. MSE has been working on getting the local governments together for something like 5 YEARS to get a deal done and the only serious effort has been in the last 6 months to a year or so.

UNACCEPTABLE.

 

[JB_kings]

No, the city/county precluded that. MSE has been working on getting the local governments together for something like 5 YEARS to get a deal done and the only serious effort has been in the last 6 months to a year or so.

UNACCEPTABLE.

Ok, I understand that this is half baked and rushed to meet the November vote. I'll I'm asking for is to take the time and get all these details ironed out. These problems are not unheard of in big deals, they are the norm. Although they usually don't get this much press coverage. The problem is that they need another 6 months to work this out. My hope is that the Maloofs have enough patience to get this right. Forget the last 5 years. You are close to a deal and there are some things left to be worked out. I think there are enough voters to get this through, but it's going to take a UNIFIED arena team all on the same page. Whether it takes the next two months or two years - just get it right.

 

[kupman]

This has been a hard week for proponents of this deal. I could have been a proponent of A deal, but not this one. I think it's too one-sided.

Really? when have you ever said something that was pro-arena?

I think the City should buy the arena from the Maloofs and renovate it. It's good enough for CIF, ice shows, the circus, concerts, etc. It may or may not be good enough for the NBA.

running the place with no major tenant sounds like a big waste of money to me.

And I'm not even against a new arena in the railyard.

Wait a second, I thought you were philosophically opposed to pouring money into pro sports. I'm confused, what kind of deal would you be in favor?

 

[bringbackbobby]

IIRC it took 20 years to get the Giants a stadium, I might be off by a few years but I know it took a long time. The people of SF didn't want to layout public moneys to build the new stadium. It finally got approved with private full private financing.

These sorts of deals require patience, hopefully the Maloofs and NBA will have it.

I could be reading too much into your quote, but if you are holding out for a deal to come through in which the arena is built on "full private financing" I think you'll be waiting a very long time. San Francisco is a much larger market with far more big corporations to draw corporate sponsors from. I for one don't mind spending an extra .25 cents for every 100 dollars I spend to:
1) keep the kings here in Sacramento, Don't get me wrong - the RiverCats are great and I love going to those games too, but there's nothing like having a home pro team for all of us to rally behind.
2) keep an entertainment venue here in Sacramento for concerts, performances, etc. (If the kings leave, Arco will be demolished),
3) keep the greatest owners a team and a city have ever known from leaving. They've put alot of money into this city, and given us a great team to support - for the past 8 years I've heard nothing but how lucky we are from virtually everyone, and now all of a sudden fans are turning their backs becuase the Maloofs simply want the city and county to honor the deal they all agreed upon after months of negotiating? Are you kidding me?
4) develop what has been the biggest eye sore in Sacramento (the abandoned Union Pacific Rail Yard) since anyone can remember,
5) revitalize downtown with an entertainment hub that would actually give people a reason to go downtown,
6) build a larger arena that will entice more marquee artists (musicians or otherwise) to include sacramento on their tour stops
7) build a larger arena so more kings fans can attend more games
8) save myself the embarasment of being known througout the county as the greatest fans the world of sports has ever known that whined about A QUARTER CENT sales tax of which only half was going to the arena!,
9) re-develop the railyards (yes I know I've said this before, but it's worth mentioning again. Next time you drive by it, take a look and then ask yourself if it's any wonder Phil Jackson doesn't make fun of our city.)
10) Finally... for one time in my life... actually being able to see my "tax dollar" to work!

Come on Sacramento, this is embarrassing.

Thank you Maloof Family for all that you've done here in Sacramento, and for giveing me great basketball to watch and support for the past several years.

bringbackbobby

 

[kennadog]

One point here. I did not hear the Maloofs say Friday on KHTK that they want a flat parking lot, instead of a garage. What I heard was two things about the garage they didn't like.

They do NOT want the practice facility on top of the parking structure and they did not like the design of the parking structure. Seems tacky to me and was an obvious intent to save land by the developer.

The garage design lacks "speed ramps." These are ramps designed to facilitate a quicker exit of trafffic. Seems sensible to me.

 

[Arena Skeptic]

I don't know where else to put this...

I listened to the KFBK interview just today (okay, I have better things to do), and it's now clear to me that the Maloofs really want to go with a different developer. Now, you really do have to listen carefully to catch it, but it's there.

Listen to both parts.

My impressions...

1) Joe Maloof is pretty coarse. If he ever goes into politics, he's going to need a lot of coaching.

2) They're not happy with Thomas Ent. I personally think it'll be Angelo, who has been pretty vocal in the past, and who is involved with nearly every successful political campaign in this area (e.g., Fong, Dickinson, Steinberg, Matsui, and on and on).

3) It really galls me when Joe openly says that they'll be back in "18 or 20 or 25 or 30 years, asking for another arena." Ummm... 18? Isn't the proposed lease for 30 years?

4) I think Angelo is far, far more likely to go with 8,000 parking spots in an open configuration, and not a parking structure.

5) The Maloofs will go back to the JPA with Angelo's proposal on or before Oct 6, which is the mandated drop-dead date.

I highly recommend everyone listen to this interview. It takes about 25 minutes.

 

[love_them_kings]

I don't know where else to put this...

I listened to the KFBK interview just today (okay, I have better things to do), and it's now clear to me that the Maloofs really want to go with a different developer. Now, you really do have to listen carefully to catch it, but it's there.

Listen to both parts.

My impressions...

1) Joe Maloof is pretty coarse. If he ever goes into politics, he's going to need a lot of coaching.


3) It really galls me when Joe openly says that they'll be back in "18 or 20 or 25 or 30 years, asking for another arena." Ummm... 18? Isn't the proposed lease for 30 years?

.

I agree with you on #1. As far as #3 goes, look how long it will have taken to go from discussions to actual having a completed arena, IF they get one. If they plan on needed an arena in 30 years, it may be necessary to start campaigning at the 18 year mark! Seriously, I think his point is, they are not going anywhere.

 

[JB_kings]

Well Thomas Ent is in escrow right now with Union Pacific for all 240 acres. As Joe stated, there are a lot of moving parts. The Jerde Partnership is the master architect. Thomas Ent is kind of a spinoff of Jerde. Jerde also has designed other Maloof projects so I doubt they are the problem. I can't see a new developer coming in and assuming the escrow at this point unless Thomas just flat doesn't have the funds to do this or backs out. There is a master plan for the railyards and it is split into districts. The best bet would be for Thomas to sell the SED land to another developer that the Maloofs prefer. But first they have to close on the land. If I knew what was holding up escrow, I might be the first one. The mayor said this thing should set a new record for length of time in escrow. It has been a very long time.

 

[JB_kings]

I don't know where else to put this...

I listened to the KFBK interview just today (okay, I have better things to do), and it's now clear to me that the Maloofs really want to go with a different developer. Now, you really do have to listen carefully to catch it, but it's there.

Listen to both parts.

My impressions...

1) Joe Maloof is pretty coarse. If he ever goes into politics, he's going to need a lot of coaching.

2) They're not happy with Thomas Ent. I personally think it'll be Angelo, who has been pretty vocal in the past, and who is involved with nearly every successful political campaign in this area (e.g., Fong, Dickinson, Steinberg, Matsui, and on and on).

3) It really galls me when Joe openly says that they'll be back in "18 or 20 or 25 or 30 years, asking for another arena." Ummm... 18? Isn't the proposed lease for 30 years?

4) I think Angelo is far, far more likely to go with 8,000 parking spots in an open configuration, and not a parking structure.

5) The Maloofs will go back to the JPA with Angelo's proposal on or before Oct 6, which is the mandated drop-dead date.

I highly recommend everyone listen to this interview. It takes about 25 minutes.

ok, I listened to the two part interview on the KFBK website.

1) The Maloofs aren't politicians, they are business men. Joe doesn't sound any different in that interview than any of the hundreds of others I've heard.

2) Joe is clearly not happy with the developer. He's avoiding the fact that the city was responsible for what the developer came back with. Getting away from this he said/she said thing, if anyone out there thinks that 4.5 acres for an arena and parking lot are enough - you're crazy. Myself, I think 8.5 is too small.

3) You got galled up over nothing. Nowhere did he say they would be back later to ask for another arena. What you heard was a joke about them being 85 years old and asking for another arena. That was about discussing the 30 year lease and how old they would be at that time. The part about 18 years had to do with them being here and the developer gone after 3-5 years.

4) 8,000 parking spots Where does this come from? Even the plans I saw for the arena in the 100 acres next to Arco shows a parking garage. The reason is that the 85 acres owned by the Maloofs is going to be sold off no matter what happens. Sorry there is no flat lots with 8,000 spots in anyone's plans. 5,000 - 6,000 is the number in the basic terms item 12.b and that has to be within 10 minute walking distance.

5) I missed the part where Angelo had a plan and he owns the railyard now. When did this happen? I mean it's ok if that does happen, but lets be clear here and say it's not on that interview.

 

[whozit]

.........................

2) Joe is clearly not happy with the developer. He's avoiding the fact that the city was responsible for what the developer came back with. Getting away from this he said/she said thing, if anyone out there thinks that 4.5 acres for an arena and parking lot are enough - you're crazy. Myself, I think 8.5 is too small.

.........................

You got that part right. Out in neck of the woods I live, there is a proposal on the table locally to require slightly over a half acre per lot for any new development. Granted the reasoning out here is the space needed to properly install septic systems, but still, that is for a single family dwelling!