Arena: Sacramento releases financing plan
From Rob McAllister at KFBK:
Ticket surcharges and other profits from the arena will be used to help fill the revenue lost in the proposed parking lease deal so that the city of Sacramento can construct a new home for the Kings.
Plugging the $9 million hole will primarily come from those who will go to the new sports and entertainment complex at the Railyards, said Mayor Kevin Johnson’s Chief of Staff, Kunal Merchant.
“On all of the tickets, except for suite tickets, there will be a 5% surcharge,” Kunal said during a meeting at City Hall Wednesday.
That will include more than 200 events such as concerts, circus acts and Kings’ games.
A percentage of other revenue made will also filter back to Sacramento’s general fund. The city will receive 15% of the first $10 million made, another 30% of the next $5 million in profits and half of everything else made after that. AEG will get the rest for assuming control of the arena operations.
“That way AEG is motivated for the facility to be a success and the city is motivated for the (arena) to be a success,” said Merchant. “Together we wind up being on the same page.”
The upfront construction costs will be handled by the three major partners. The city of Sacramento will put up 65% of the estimated $387 million cost through the parking lease deal. If that does not equal $255 million, the city will look to sell vacant public land that will likely increase with the construction of the arena in downtown.
The Maloofs have agreed to pitch in $73 million while AEG will contribute another $59 million.