One detail that I am unclear on after this week’s announcement by Mayor Johnson: who will own the arena?
If Burkle’s involvement is centered on the downtown arena portion, does that mean he will operate the arena or own it? If the city is still planning to put up the $255m it had pledged as the lions share of the arena costs under the rejected 2012 deal, shouldn’t the city own the arena, as it would have under that plan?
Johnson seemed to indicate that he supports protecting taxpayers from subsidizing the arena and team. But mortgaging the city’s parking revenue for a limited stake in the resulting ESC would be a downgrade.
I suppose we’ll have to wait to find out when Preliminary Terms Sheet Part III: Return of The Returnening is released.
10 thoughts on “Who will own Mastrov/Burkle downtown arena?”
It’ll be City ownership. Burkle is not in the business of operating arenas. He wants to build a legacy and he wants to build the retail that is attached to it. He’ll get a (probably large) cut of arena operations revenues, but that’s it.
That sounds right. Maybe it wasn’t specified because it’s assumed to still be the case.
So one big thing then is that (at least so far) this deal doesn’t have an operator like AEG putting up money, so maybe the revenue share for the arena would be larger for the City?
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I would be very surprised if the financial terms became more favorable to the city (at least as far as revenues relative to investment goes — the investment may be somewhat smaller, which would be a good thing). We already laid our cards on the table a year ago and now any leverage we had is gone.
I’d guess that AEG will still be involved, possibly with less money invested this time, meaning they would get a smaller cut. Someone has to operate the arena.
Well, we only need leverage with this proposed ownership group (and AEG, you’re probably right), correct? Not having to pay a reloc fee helps sweeten the deal for the Maloofs (goes the theory)?
Right, and I assume they’re acting in good faith, so it really shouldn’t be an issue.
But the City agreed to a certain return on investment last year, when the alternative was wait and see. A year later, the alternative is adios Kings. From a negotiating standpoint, the City is not in an advantageous position, especially given the Mayor’s very vocal, very public instance that we are going to do everything we can to keep the Kings.
I except the City’s ROI in this deal to be very similar to last year’s, but if it’s not, I can’t think of any reason to expect it would be any better.
I guess the only thing would be that the alternative is adios Kings for the city and for the new ownership group, whereas last year the Maloofs’ alternative was an even sweeter deal in relocation.
Hang on now. If the assumption is City ownership, then part of the expense will have to be the sale of the underlying land to the City–currently, the K Street location is privately owned. Won’t that add to the total cost of the project? (The Railyards location was on city owned land.)
Johnson says he supports protecting taxpayers from subsidizing the arena, but I think he’s doing that thing that politicians do sometimes where they say things that aren’t actually true because they want to convince people to go along with their idea.
The city would swap railyards land for the Dowtown Plaza. Seems like sa long range investment opportunity that could interest a developer / investor like JWA.
That actually sounds interesting.
err.. meant “could’ not “would”