The Kings managing partner says the team has been building a roster of players, which he called "assets," that put it in a position to become a winner. He says he'll be disappointed if the Kings don't have a winning record within a few years. Tony Bizjak The Sacramento Bee
The Kings managing partner says the team has been building a roster of players, which he called "assets," that put it in a position to become a winner. He says he'll be disappointed if the Kings don't have a winning record within a few years. Tony Bizjak The Sacramento Bee

Arena

Sacramento Kings build entertainment mecca downtown as team struggles

By Dale Kasler and Tony Bizjak

dkasler@sacbee.com

March 10, 2016 11:00 AM

The Sacramento Kings often look a mess in the nightly grind of the NBA. As the team closes in on its 10th consecutive losing season, sports reporters portray it as an organization in chronic disarray.

It’s a different story at the dusty construction site that the Kings will soon call home. There, the team is a well-oiled entertainment machine building a pleasure palace that management has designed to dazzle the fans and – for the first few years, anyway – distract them from wins and losses.

Less than seven months from completion, Golden 1 Center is drawing raves from those who’ve toured it and has become an instant hit among season ticket buyers. Anchoring the southeast corner of Downtown Commons, the shopping center the Kings are redeveloping, Golden 1 is touted by the team’s principal owner as the world’s grandest arena.

It will boast the NBA’s largest and most sophisticated video scoreboard, an array of restaurants and private clubs, and assorted technological wizardry that will enable fans to order food from their smartphones and watch the game from an array of camera angles on their tablets.

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In short, the building will be the latest example of the sports arena as theme park, where the bells and whistles compete with the action on the court for fans’ attention.

“For us, it’s all about creating this great spectacle that fans are drawn to,” Kings Chairman Vivek Ranadive said.

In an interview Wednesday at soon-to-be-vacated Sleep Train Arena, Ranadive said he is committed to putting a winning team on the floor as soon as possible. He argues that the Kings are making progress on the court in ways that aren’t always obvious. In the meantime, the team is pouring millions into an entertainment venue that is designed to transcend the Kings’ basketball success or failure and form the foundation of a moneymaking empire for years to come.

We promised the world’s best arena; we didn’t promise the world’s second-best arena.

Vivek Ranadive

None of this comes cheap. The price tag for Golden 1 Center has shot up to $518.8 million, including another $9.4 million contributed by Kings owners in recent weeks, according to construction reports filed with the city of Sacramento. When first conceived three years ago, the 17,500-seat building previously was expected to cost just under $448 million.

The additional $72 million doesn’t mean the project is beset with cost overruns. The new dollars reflect decisions by the Kings to add or enhance the features of Golden 1.

 

Simply moving the practice facility to a spot adjacent to the new arena, instead of leaving it in Natomas, added $30 million. Other features include vastly improved Wi-Fi connections and a mundane-sounding but crucial design change that will move hundreds of seats from the upper bowl to the lower bowl, bringing fans closer to the floor. Kings President Chris Granger said about $10 million of the budget represents costs from the renovation of the surrounding plaza.

The city of Sacramento three years ago capped its arena subsidy at $255 million. That means all those extra dollars are coming out of the pockets of the Kings’ owners.

“What we have done is we have increased, by choice, the amount we are putting into the building to improve the fan experience, mainly in and around technology,” Granger said as he led a tour of the arena this week.

One of the most visible examples: An overhead scoreboard being assembled by Panasonic Corp. of North America. At 84 feet long, it will be nearly as long as the basketball court itself and will display video in “4k ultra” high definition, a first for the NBA. Construction reports from a city consultant say the scoreboard, plus wrap-around message boards and other video screens, will cost $10.5 million.

The scoreboard embodies Ranadive’s background as a Silicon Valley software tycoon, his fascination with all things technological – and his competitive streak.

“We couldn’t play second fiddle to anybody else in terms of the technology. I didn’t want Mark Cuban to have a bigger and better (video) screen than we’re going to have,” Ranadive said with a smile, referring to the hard-charging owner of the Dallas Mavericks and co-host of TV’s “Shark Tank.”

Cost no problem

Golden 1’s sparkling amenities will add to the increasingly important phenomenon known as the “fan experience,” in which patrons do more than just take their seats and watch the game. Sports marketing experts say teams have to engage their fans with contests, VIP lounges, gourmet food and a constant stream of game highlights and other data they can download to their phones.

“Not everyone’s going to sit there and watch 48 minutes of basketball,” said Bill Sutton, a former NBA executive who is now a sports business consultant in Florida. “You’ve got to make this so attractive that people will want to come out (to the game) instead of having a great experience watching at home.”

Ranadive, who is fond of referring to sports arenas as “the 21st-century communal fireplace,” is happy to oblige.

“This is where people come to see, to be seen, to enjoy the game, to enjoy each other’s company,” he said. “If they want to just focus on the game, they can watch the game. If they want to interact with their friends, they can interact with their friends. If they want to see the game from different camera angles, they can do that.”

Cost, he said, is no problem.

I think a new building buys you two to three years, no matter how the team is playing.

Bill Sutton, sports business consultant

“We promised the world’s best arena; we didn’t promise the world’s second-best arena,” Ranadive said. “If you’re going to build the best, you have to be willing to invest in it.”

Compared to the $1 billion the Golden State Warriors plan to spend on their new arena in San Francisco, he said the Kings are getting a good deal. “We’re still getting an amazing arena for the money we’re spending,” said Ranadive, who was the Warriors’ vice chairman before leading the successful effort to keep the Kings from moving to Seattle.

The construction project endured some early hiccups, including a drenching rainstorm barely two months after groundbreaking in 2014 that left the site a temporary mud bath. Nonetheless, Granger said construction remains on schedule and will be “100 percent complete” in late September. The first officially scheduled event is a nearly sold-out Oct. 15 concert by the pop-rock band Maroon 5; Granger said the Kings are so confident with the construction schedule that they plan to schedule more shows before then.

“You will see multiple acts before Oct. 15,” he said.

City officials say they are pleased that the Kings are pouring more money into the arena, saying it shows the team’s commitment to downtown.

“If they were doing the opposite, we would be worried,” said Desmond Parrington, the city’s arena project manager. “That would signal financial problems. That is not the case.”

The investment goes beyond the arena’s undulating aluminum walls. The Kings are investing another $200 million-plus to renovate the rest of the former Downtown Plaza, the failed shopping center where the arena is taking shape.

The centerpiece of the renovation is a 15-story hotel and office tower that’s expected to open by next March, when Golden 1 will host early rounds of the NCAA men’s basketball tournament. The Kings have just started work on the renovation of the west side of the mall, now known as Downtown Commons, and eventually the arena will be surrounded by a string of shops and restaurants. Macy’s is expected to renovate its store as well.

Two blocks away, the Kings say they will soon submit plans for the redevelopment of the 800 block of K Street, a blighted stretch of downtown that they control as part of their arena deal with the city.

‘Newness wears off’

Sacramentans seem to be responding to the Kings’ free-spending ways. Granger said season-ticket sales for next year are approaching the 11,000 mark, meaning more than 60 percent of all the available tickets are already gone. The team soon will cut off season ticket sales in order to give fans the chance to buy individual game tickets and partial season ticket plans, Granger said.

Perhaps more importantly, the priciest seats have gone quickly. Of the new arena’s inventory of 2,500 premium seats – a key element in making Golden 1 an economic success – only a handful of courtside seats haven’t sold out. Golden 1 will have twice as many premium seats as Sleep Train and will include 36 traditional luxury suites, 48 miniature suites known as “lofts” and hundreds of “club” seats that come with access to VIP rooms.

Most of the premium seats are locked up for years, ensuring a healthy revenue stream long after DeMarcus Cousins and other current Kings players probably will have retired. The suites and lofts have been leased under 10- and 12-year contracts. Club seats were snapped up under three- and five-year leases. Granger declined to discuss pricing for premium seats.

In addition, he said the arena has drawn “significant interest” from Sacramento-area and national corporations wanting to buy advertising inside the building. Golden 1 is paying $6 million a year for 20 years for the arena’s naming rights.

Whether they involve suites or naming rights, those multiyear contracts will likely buffer the Kings somewhat from any drop-off in attendance that might result if the team doesn’t improve on the court.

Sports marketing experts say new arenas draw increased attendance, but the honeymoon eventually fades. With the Brooklyn Nets having a terrible season, their home attendance has slipped significantly in just their fourth year at the $1 billion Barclays Center. After three years of playing to near-capacity crowds, the Nets have sold just 83 percent of their tickets this year, one of the worst attendance records in the league (the Kings have sold 99 percent of their tickets).

“I think a new building buys you two to three years, no matter how the team is playing,” said Sutton, the former NBA executive. After that, he said, “the newness wears off.”

The Kings’ ability to sell tickets at Golden 1 will have only an indirect effect on the city’s ability to repay the bonds it issued last fall to finance the public’s share of the project.

The city will use projected increases in downtown parking revenue to pay off the bulk of the debt, but only a small portion of that revenue is expected to come from people attending games, concerts and other events at Golden 1. The Kings will provide a significant source of revenue for the debt repayment by making lease payments to the city. The payments begin at $6.5 million a year and will grow with inflation. They aren’t tied to the profitability of the arena.

“From the city’s perspective, we are covered; our contribution is fixed,” said Assistant City Manager John Dangberg. “Our investment in the project was based on what the city could afford, and what the returns back to the city were. The returns back to the city far exceed our expectations.”

Business leaders, however, say they’re eager to see the Kings improve as a team. Downtown developer David Taylor said having fans flock to the games will help sustain the economic momentum the arena is bringing to the central city.

“From the perspective of a property owner next door to them, it has been a real pleasure to see the impact so far,” said Taylor, a season ticket holder who owns the U.S. Bank tower across the street from the arena. “How it will be perceived three or five years from now has a lot to do with how the team improves. ... If you have a losing team every year, people are going to lose interest and they are not going to sell out on a regular basis.”

With a fan base that once sold out 497 home games in a row, the Kings probably don’t have to worry right away about selling tickets at Golden 1. Nevertheless, Ranadive said he realizes the Kings need to begin winning games at some point.

“Obviously, we need to have a good product,” he said, adding that he thinks a winner is possible in the foreseeable future.

“We’re very much on that path,” Ranadive said. “Three years out, I would be very surprised and very disappointed if we didn’t have a team that was solidly in the win column.”

Dale Kasler: 916-321-1066, @dakasler

Golden 1 Center: where it stands

Sixteen months after the ceremonial groundbreaking, the $519 million new Kings arena is nearing completion.

  • Roof is on and exterior walls are sheathed in aluminum. Basic interior contours are in place, but no seats have been installed.
  • Next big steps are pouring the concrete for the arena floor and installing the glass on the oversized “hangar doors” at the main entrance.
  • Scheduled arena completion: Sept. 26.
  • Hotel-office tower has just started to “go vertical.” Shell of building will be done this fall, but occupancy won’t begin until spring. Demolition starting for remodeling of western section of mall near Macy’s.