Judge Swats Away Challenge to City Funding for New Sacramento Arena

Monday, July 27, 2015
Sacramento Kings’ DeMarcus Cousins blocks a shot (photo: Rich Pedroncelli, Associated Press)

You can almost hear the late, legendary Los Angeles Lakers announcer Chick Hearn calling this one from above: “The game is in the refrigerator: the door is closed, the lights are out, the eggs are cooling, the butter’s getting hard, and the Jell-O's jigglin’!”

Sacramento County Superior Court Judge Tim Frawley issued about as conclusive a ruling Friday as can be preliminarily handed down when he dissed every one of the arguments made by plaintiffs trying to block the use of municipal funds to build a new arena in the state’s capital.

Well, not all the funds. There was already an approved $255-million cash and land contribution toward development of the $500-million arena, dearly sought by former NBA basketball star and now-Sacramento Mayor Kevin Johnson, which weathered judicial and legislative challenges. This case was ostensibly about another transaction.

“Because the City agreed to contribute ‘assets’ beyond its capital contribution, Plaintiffs infer a nefarious, backroom deal to subsidize the investor group’s purchase of the team, separate from the Arena,” the judge wrote.

If not nefarious, the deal was at least complicated and admittedly played out behind the scenes by powerful financial and political interests.

The city thought it had a deal with the owners of the Sacramento Kings basketball team in April 2012 to build a new arena, ending threats by the Maloof family to sell the franchise to out-of-towners. In January, it was revealed that the Maloofs got a better offer from some Seattle folks and was selling to them anyways.

Mayor Johnson led the effort to find a local buyer and sweetened the offer. In the end, the city found one and also chipped in control of 3,700 parking spaces and entitlements to build six digital signboards rent-free on city land next to freeways. The deal was approved in May 2014 and three local activists sued to block it.

At the heart of their objections is an argument that the city is using taxpayer dollars to build a sports facility primarily attended by wealthy patrons that does little for the city’s economic well-being and may actually be a detriment.

There is some academic support for that position.

A study in 2011 (pdf) by economics professors Robert A. Baade and Victor A. Matheson at College of the Holy Cross in Massachusetts cited a multitude of previous studies that found the “economic impact of sports teams or events is a fraction of that claimed by the boosters, and in some cases actually show a reduction in economic activity.” Short-term gains are short-lived and long-term gains are negligible.

In the end, the study agreed with those studies that “evidence of significant direct economic benefits from sporting events, franchises, and stadiums is lacking.” While it found that people derived pleasure from having a sports franchise, “sports may make a city happy, but they are unlikely to make a city rich.”

It’s hard to tell exactly how happy the city is with its new, almost certain arena. An attempt to put an arena referendum on the ballot for voters failed to pass muster in the city clerk’s office in January 2014. Proponents blamed the pro-arena political power structure. The city clerk blamed it on nine different versions of the proposal being circulated for ballot-qualifying signatures and a failure to let people know that the proposal could become law.

In turning away the lawsuit, Judge Frawley denied that the city had even committed what Chick Hearn would have called a “ticky-tack foul.” There was “no harm, no foul.” The case was a “slam-dunk” and plaintiffs had “thrown up a brick” during “garbage time. . . . The mustard was off the hotdog. The plaintiffs had two chances, slim and none, and slim just left the building.”

Both sides have 15 days to file objections.

–Ken Broder


To Learn More:

Judge Rules in City’s Favor in Sacramento Arena Lawsuit (by Tony Bizjak and Dale Kasler, Sacramento Bee)

Sacramento City Clerk Rejects Vote on Subsidies Earmarked for New Arena (by Ken Broder, AllGov California)

Isaac Gonzalez, James Cathcart and Julian Camacho v. City of Sacramento et al (Sacramento County Superior Court)

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