Can't recall if this has been posted before, but I was just reading through it a bit more thoroughly so I thought I'd put it up:
http://eyeonsacramento.com/2013/03/an-e ... -proposal/
I don't know much about the group's leanings, perhaps they are diehard anti-arena, but just on its own merit, their report is intriguing. If you're interested, focus especially on sections VI and VII, in which the report takes apart and/or asks questions about the financing plan and the general fund backfill for Sacramento. The problem with the term sheet is it essentially has no details and is largely based off projections that aren't sourced or explained. Most of the money is just money shuffled around from other sources, not new revenue, and it all leads back to the city's general fund being on the hook in the event of a default. How likely is a default? Well even the Sacramento projections on the interest rates are relatively quite high, which is normally the case for high risk debt. I highly recommend reading the whole report, especially those two sections, if you're having doubts.
Now the question is: how much is this the NBA's problem? Perhaps none at all. I doubt the NBA is greatly concerned with the long term health of the city of Sacramento, but on the other hand, they also might not want to have Sacramento's story end up a cautionary tale about entering into large public partnerships with the NBA, in the event of a default disaster. Then again, maybe the NBA doesn't care.
The bigger side of things, to me, is how do you get this into the form of an actual piece of binding legislation? Will the Sacramento city council just roll with the current projections, or will more work need to be done? Keep in mind, this is not the equivalent of our MOU, where the financing has been worked out and agreed to, the Sacramento city council essentially just endorsed a non-binding letter of intent, stating that they like the terms and projections in this document and would likely move forward. I'm not sure if the council would push back, they seem to be more concerned with the political fallout of keeping the Kings than anything else, but an actual financing agreement is going to have to have a lot more detail and legitimate terms to move forward. The fact of the matter is, the vague responses that the general fund would likely be protected or that the city isn't really on the hook, ie all the BS, won't hold up nearly as well. The bonds won't be issued without guarantees, the people with the real money financing these bonds are going to want to see hard numbers, not rosy projections. There is so much left to be hashed out on Sacramento's side that their only hope is to commit to essentially not doing any due diligence and just taking the City Manager and investors' word for it.
And why bother if the Seattle deal is nixed? What pressure is on the Sacramento city council to rush this thing through if the NBA removes the threat of an impending sale and move? It would be in the best service to their city, realizing that they were no longer under the gun, to make sure this deal really pencils out. The NBA will be deciding the fate of the Kings before their city council gets into the nitty gritty, so who is to say really how long the next leg of the race for them will take? They won't be under any more time constraints so more scrutiny is inevitable, even by a seemingly eager city council.
I don't want to take the position of sports complexes being awful for an economy. I don't buy into that wholesale. They certainly spark development in their surrounding area, etc., whether or not that diverts from spending elsewhere, I'm not positive. The problem here is that Sacramento's proposal has a bizarrely complex Rube Goldberg financing machine that serves to obscure where the money is really coming from all in the name of supposedly revitalizing a downtrodden economy via a new sports building. Their central piece for economic development is a basketball arena with zero chance of even adding a secod professional team beyond the WNBA. It's not going to happen, which is why I always end up bringing the Simpsons "Monorail" episode. Tons of lofty promises that don't hold up to any kind of scrutiny being readily consumed by people desperate to get the wheels turning. I'm not going to tell Sacramento what's best for their city, because frankly, I don't give a damn, but all of these aspects are relevant, as they are the biggest impediments to a competing plan.
