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Tuesday, March 29, 2011 |The Anaheim City Council voted unanimously and with almost no discussion Tuesday night to issue $75 million in bonds to billionaire Henry Samueli so he can bring the Sacramento Kings basketball team to the Honda Center.
It’s now up to the National Basketball Association to approve or reject the deal.
“There’s no risk to the city,” Mayor Tom Tait repeated over and over. “There’s no risk whatsoever to the city.”
One other thing: The new team’s name will include the word Anaheim and only Anaheim when it comes to describing location. Legal documents specifically were drafted to preclude a repeat of the Los Angeles Angels of Anaheim fiasco.
“We had criteria,” Tait told a phalanx of television and other reporters from Sacramento, Los Angeles and local outlets at a news after the meeting. “No risk to the taxpayer money and no city money … and the name shall be Anaheim.”
Samueli, the co-founder of the Irvine-based Broadcom, did not attend the council meeting
The action came in the middle of a financial drama as Sacramento city officials, said they’re fine with the move as long as the Kings pay off a $77 million loan it owes the city.
Sacramento Mayor Kevin Johnson, according to the Sacramento Bee, said the Maloof family, which owns the team, assured the city the loan would be repaid. City officials are asking for it in writing.
“I think the mindset of the city is to make sure that they fulfill their obligation,” the mayor told the Sacramento Bee.
“And if they do that, then I don’t want a messy divorce, I don’t want to be a poor sport about it, it’s their decision. And quite frankly, if they don’t want to be here, then I’m going to be OK with (them moving) and I think our community will be OK with that.”
Terms of the Deal
Under the proposal approved by the council, three companies, all owned by Samueli, will buy up to $75 million in city bonds.
The city will receive the money from the Samueli firms — somewhat like an escrow company, as Tait put it — and turn around and give the money to another Samueli company, Anaheim Arena Management, LLC (AAM), which manages the city-owned Honda Center.
The $75 million will be used to make up to $25 million worth of improvements to the Honda Center and $50 million for other expenses, possibly including a relocation fee the Kings would pay to the NBA.
Samueli, who also owns the Anaheim Ducks hockey team, will be repaid from revenue generated by the sports teams and other events at the Honda Center.
The center was built in 1993 and currently has about $36 million in outstanding debt on bonds that were issued in 2003. Those bonds also are being repaid with arena revenue at a rate of about $5.5 million a year. They will be paid off in 2023.
City officials said they didn’t know how much revenue the Honda Center generates each year but the new bonds must be paid off in 10 years. The city won’t receive any revenue from the Honda Center until the new bonds are paid off.
As part of the new bond package, Samueli’s company contract to manage the Honda Center will be extended another 10 years to 2033 and his firm has the right to additional extensions through 2053.
The new bond sale was supported by the Anaheim Chamber of Commerce. City officials and civic leaders said payroll, ticket sales and other consumer spending associated with professional basketball teams has meant more than $180 million a year in local revenue to other cities.
But William D. Fitzgerald with the watchdog group Anaheim HOME (Home Owners Maintaining their Environment) reminded the council of previous ventures that didn’t work out financially as hoped, including the Anaheim Rams’ football team move to St. Louis.
And in Sacramento, Assistant City Manager John Dangberg sent Anaheim City Manager Tom Wood a letter Monday saying Anaheim’s enticement of the Kings could cause Sacramento “irreparable harm.”
The Kings have until April 18 to file a notice of relocation with the NBA, according to multiple news accounts.
Like much of the Central Valley, Sacramento suffers from an unemployment rate of more than 12 percent due to the Great Recession and loss of the Kings could mean further economic damage.
If Anaheim goes ahead with its plan, Dangberg urged the city to require the Kings to make repayment of the $77 million to Sacamento a condition before relocating to Anaheim.
The Sacramento request never was mentioned in the public discussion.