Why the sale of AEG doesn’t matter for Sacramento

[youtube https://www.youtube.com/watch?v=E1cu4VD1HZ8&w=560&h=315]

The pending sale of Anschutz Entertainment Group does not mean hopes of an arena revival plan are dead in Sacramento.  It was already dead because you can’t kill something twice.

A new owner for AEG has less to do with the deal it committed to in Spring and more to do with the threat of another competitor entering the Southern California market.  The sport and entertainment giant owns Staples Center and a portion of the Los Angeles Lakers (among many other events and entertainment venues) and another NBA team in Peter Anschutz’s neighborhood meant the bottom line would have taken a hit.

As part of the Time Warner television contract with the Lakers, adding a third team in the market would have resulted in the 16-time NBA champs losing 10 percent or $500 million of the $5 billion guaranteed of their 25-year deal. AEG owns 30 percent of the Lakers, which equated to a loss of $150 million on the television agreement alone.

Factor in other revenue hits from ticket sales and corporate sponsors, the negative impact could have been in the millions and more.

Enter Sacramento’s little arena problem and the city’s desire to keep its only major professional franchise, and AEG found its solution to keeping its $150 million, or at least most of it.

By contributing $58.7 million to Sacramento’s project, AEG could have insured a third NBA team did not set up in Southern California.  They could have even turned a small profit while operating that arena for the next 30 years.

With just $150 million to potentially lose, spending nearly $59 million meant the company could have come out ahead by $91 million.

During a March press conference at city hall, AEG President Tim Leiweke said “I’ll bet on Sacramento and I’ll bet on the mayor.” If anyone is still placing odds, find a Las Vegas casino and plop down cash on Leiweke not gambling on Kevin Johnson for a second time.

Seattle and other cities are lining up to swipe the Kings, while Anaheim likely lost its only shot after the owners gave Sacramento a one-year extension, stopping the Maloofs from packing the moving trucks and heading south on Interstate 5.

With the threat seemingly squelched for now, AEG has no reason to come back to Sacramento for round two.

The belief that a possible new owner would buy the Kings and resurrect the last arena deal from the depths of those dusty railyards is a mere hopeful dream for fans. It can happen, but don’t count on the new bosses at AEG spending $58.7 million out of the goodness of their hearts.  They will likely have just spent billions to acquire the most sought after sports and entertainment giant on the globe.


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