Sacramento Riverfront Entertainment & Sports Complex ... · Matt is the V.P. of SRO, Inc. – a...

THINKING OUTSIDE THE ARENA BOX

SACRAMENTO’S GREATEST ASSET COMES ALIVE

Sacramento Riverfront Entertainment & Sports Complex Proposal

M&M GROUP ~ 12.24.2009

December 24, 2009

Citizen’s Task ForceATTN: Matt Massari621 Capitol Mall, 18th FloorSacramento, CA 95814

Dear Matt:

Thank you for considering us for your stadium proposal request. M&M Group is comprised of several local business people that are focused on the strength of downtown and midtown Sacramento. Over the last year we have developed a plan that we believe will create a truly unique sports and entertainment complex that strengthens existing local businesses and creates vast new job opportunities.

We are confident the methods and design we are proposing will not only meet, but exceed our cities needs and expectations. Please call us any time to discuss this proposal. You can reach us directly at (916) 448-5140, or my cell phone (916) 296-6520, or by E-mail at [email protected].

Sincerely,

Matt HainesPresident M&M Group

M & M GROUPSacramento Riverfront Entertainment & Sports Complex2633 Riverside Blvd, Sacramento, CA 95818Office: 916-448-5140Cell: 916-296-6520Fax: 916-448-5120Email: [email protected]

SACRAMENTO RIVERFRONT ENTERTAINMENT & SPORTS COMPLEX

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Sacramento Riverfront Entertainment & Sports Complex will be the Grand

Gateway into Sacramento, greeting travelers from the Bay Area and beyond. Unique in de-

sign and nestled next to the River, Sacramento will be home to the most beautiful and premier

Entertainment and Sports facilities in the World.

Imagine, a Sacramento Entertainment & Sports Complex that is centered around the Sacra-

mento River; a place where people of all ages will flow like water into Sacramento, enjoying

today and planning more fun for tomorrow. Pedestrian-friendly walkways encourage bicy-

cling and walking from the Train Museum of Old Sacramento to the boat docks of Miller Park;

Eco-friendly transportation such as electric trolleys will wiz families up and down the heart

of midtown for dinner and shopping; and the picture perfect Complex with incredible views

from all sides, home to year-round, world-class events, won’t cost the taxpayers one dime.

If it sounds to good to be true..its not. This proposal will outline a plan that shows how Sacra-

mento’s stadium dream can become reality.

SACRAMENTO ’ S GREATES T ASSE T. . .

OUR R I V ER SACRAMENTO ’ S GREATES T ASSE T. . .

OUR R I V ER

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Sacramento Riverfront Entertainment & Sports ComplexLocated at the Docks Area in Downtown Sacramento.

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Arena

Grand Terminal

Outdoor Terrace

Pedestrian Walkway

Electric Trolley

Street

Railroad/Lightrail

Train Platform

Public Gathering

Box Of�ce

Existing Riverwalk

Trolley Platform

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M&M GROUP

MATT HAINESMatt is the V.P. of SRO, Inc. – a successful Restaurant Group in Sacramento. SRO,

Inc. currently operates seven restaurants in four counties, employs over 250 people,

with annual sales of over 15 million. Matt is a dedicated entrepreneur who was born

and raised in Sacramento. Over the years he has had the vision to restore/refurbish

historical and sometimes overlooked areas into thriving dining venues. He first pro-

posed the sports complex at this location more than twelve years ago to then city

Mayor Joe Serna. (See attached)


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OBJECTIVEOur objective is to build a true state-of-the-art facility for the city of Sacramento. We

have no relationships with any other development teams or any City or State organi-

zations.

In regards to an actual development team that will build the new entertainment &

sports complex, we plan to follow the Mayor’s strategy. Once we move into the next

phase of development we will search out Sacramento’s finest assets, developers, de-

sign teams, contractors and city planners. All aspects of the development will be put

out to bid and the complex will be built as cost effective as possible.

PROJECT SITE

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T EAM

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DAY OR . . .

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N IGHT.

THE BES T LOCAT ION8

LOCAT ION LOCAT ION LOCAT ION

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The Sacramento Entertainment & Sports Complex as shown is a unique design unlike

any other in the world. It encourages use of the Riverwalk, Old Sacramento, Miller

Park, The Crocker Art Museum, The Railroad Museum, K Street Mall, and Capital Mall

all within walking distance.

Building of the Entertainment & Sports Complex right on the Sacramento River will

bring life to our most valuable asset. Imagine a restaurant or luxury sports suite with

one side overlooking the arena and the other side having doors that open up to a

deck over the Sacramento River. Incredible views from every direction, on city owned,

prime real estate that has never been utilized until now.

PROJECT LOCATIONThe Docks Area is located in downtown Sacramento. It is adjacent to the central busi-

ness district and is defined on the north by Capitol Mall, on the east by the I-5 freeway,

on the south by Broadway and on the west by the Sacramento River. Immediately

north is the Historic Old Sacramento District. Immediately south is the City’s Marina

and Miller Park. Access into the project area includes a vehicular and pedestrian bridge

that crosses the I-5 freeway at O Street, vehicular access from Broadway at the south

end of the project area and vehicular access along Front Street, the main north/south

corridor.


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• Arena and Sports Complex - This state of the art venue will have 20,000 seats and feature 70 luxury suits. The venue will also boast 4 full service restaurants, a grand entrance with Auto Museum, outdoor gathering and entertainment area attached to existing riverwalk.

• The Grand Terminal of the Entertainment & Sports Complex: would act as a Train Terminal similar to Grand Central Station and connect to the train platform and have access year round to the Grand Terminal Restaurant. We would also like to incorporate the current auto museum into this area. Which would allow for year round visitors.

•The Grand Terminal Restaurant located on the South Side of upper concourse will have four distinct views of Sacramento, showcasing our City like never before. North - Looking into the arena - South looking down into the Grand Terminal - West Outdoor patios with views of the Sacramento River - East with views of Downtown Sacramento Skyline.

• City View Restaurant: Located on the North Side of the Upper Concourse. This spectacular restaurant will be focused on downtown with an incredible outdoor terrace focused on the downtown skyline. North - With Great views of Downtown Skyline; South- looking down into the Arena; West - Outdoor terrace with views of the Sacramento River; East - with views of downtown Sacramento Skyline.

• Two Ground Level Restaurants: Locate on the lower concourse. One located in the train station and one located in the Grand Terminal and opened year round.

• River View Luxury Boxes: The West Side Luxury Boxes will have a full view of the Arena and be designed with outdoor decks facing the Sacramento River.

• City View Luxury Boxes: The East Side Luxury Boxes will have full view of the Arena, with outdoor terrace facing the downtown skyline.

• Interior Luxury Boxes: North and South luxury boxes will be located inside the Arena with great views.

• Outdoor Terrace: Surrounds the entire arena and box office.

• Outdoor Public Gathering Area - This vast area is open year round and is connect to the train station. and will be a major entrance into the grand terminal and arena. This area will be great for outdoor gatherings and special events

• Electric Trolley Platform will help deliver patrons to and from the Complex from key loca tions around Sacramento.

• Public Boat dock and river taxi access will bring people from West Sacramento and from up and down the Sacramento River.

PARKING


THE

COM

PLEX

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Existing Parking

Future Parking

High-Rise Parking

Light Rail Stations

Train

New RT Entertainment Line

Electric Trolley

Parking

Transportation

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The most important aspect of the parking will be the downtown and midtown grid

where there are thousands of existing parking places within a ten-minute walk.

1st through 30th Streets & C Street through Broadway all connect at the R-Street

corridor.

EXISTING PARKINGLarge office buildings, multilevel parking structures, and flat parking located on

Capitol Mall and throughout downtown and midtown provide ample parking. Also

vacant lots in West Sacramento.

NEW PARKINGAdditional parking structures will be located at the Setzer property on Broadway,

Miller Park, and Parcels next to the Complex.


PARK

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WALKING - BICYCLES - TROLLEYS - TRAINS - BOATS - AUTOMOBILES

TRANSPORTATION

1. Walking: Most parking will be within a ten-minute walk. The existing downtown work-

force will also be within a ten-minute walk

2. Electric Trolleys: The trolley’s would move people (East/West) up and down the R-Street

Corridor and (North/South) from Old Sac to the Entertainment & Sports Complex.

3. Train: The current Train Line would allow a unique experience for everyone with stops

at various locations. The California Train Museum, Old Sacramento, Crocker Art Gal-

lery, The Entertainment & Sports Complex, Miller Park and the Sacramento Zoo. Peo-

ple will be able to park at the Zoo and ride train to all of these locations. This will be an

incredible asset even when the complex is not being used.

4. River: This will truly set apart the Entertainment & Sports Complex. The river taxi will

take people from the Complex (city side) to West Sacramento and vies-versa. Boats

& Yachts on the water will use them before and after Events. Truly bringing the Sacra-

mento River alive.

5. RT Entertainment Line: This new bus line will feature the existing gas trolleys and will

work its way through downtown and midtown to transport patrons easily to and from

The Entertainment & Sports Complex. The cost will be included in the event ticket.


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1 0 M

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IMPACTTop 10 most positive effects on the city will be:

1. R-Street will become one of the most exciting streets in the city.

2. Broadway will be re-vitalized.

3. Miller Park will come alive, connecting the waterfront to Old Sac., leading

to new ideas and exposures for the marina and park.

4. Old Sacramento will get the biggest boost as the trains and trolley cars take

people to and from sporting events to parking and local businesses.

5. Create a one of a kind tourist destination from the California Railroad

Museum to Miller Park.

6. Create synergy through out Midtown & Downtown area

7. Bring the river alive.

8. Creating hundreds of jobs

9. Creating new business

10. Sustain and enhance existing businesses

ADDITIONAL CONSTRUCTION

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ADD I

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1. We hope to build the first green arena in the country. Focused on solar power and

which could lead to generating most of its own power.

2. R- Street corridors with walk ways and electric trolley

3. New Pedestrian – Trolley Bridge to connect R-Street to Entertainment and Sports

Complex.

4. Q- Street bridge– Enlargement allowing more autos and a pedestrian walkway.

5. New parking structures at Setzer’s location and Miller Park.

6. New train station at Entertainment & Sports Complex and at the Sacramento Zoo

(Sutterville Road) connecting the two locations.

7. New Boat Dock at the Entertainment & Sports Complex

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PROPERTY CONTROLThe City of Sacramento currently owns 80% of the 30 acre site. The State of California

and Pacific Gas and Electric own the last two remaining parcels. The current plan for the

docks has been discussed and planned for a residential and mixed use project. Although

this plan is unique in design and the possibility of high-rise living in Sacramento is still a

dream. The docks current plans could take decades before something actually happens.


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F INANCE

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FINANCE

In the toughest of times we have found the most creative way to finance the new Enter-

tainment & Sports Complex. Stadium Capital Financing Group is an experienced national

firm that specializes in stadium financing. Recent public opinion has proven that raising

taxes or city money will be a tough sell. Not only can we finance the Entertainment &

Sports Complex we can also help finance our schools, sheriff and police departments

but also our own city deficit. This process will need to be negotiated with Maloof Sports

and Entertainment and the City of Sacramento. But without a doubt this is a win-win for

everyone.

EXECUTIVE SUMMARYUtilizing our proprietary methodology, Stadium Capital can assist the owner of

a professional

NBA team in raising $50 million to $1 billion or more without:

• Incurring debt, issuing equity or relinquishing operating or governing control

Solves the capital needs for:

• Limited program – Restructuring debt, plug operating budget needs, remodel suites/

premium seating areas, stadium renovation/maintenance issues

• Full program - Facility construction, deleve rage debt

Equity Seat Rights® provides the following benefits, in addition to the capital raise:

• Raise team valuation, build long-term fan, corporate and sponsorship loyalty

• Provide flexible use of proceeds

• Furnish a “hedge”/solution for business downturn or “9/11-type” of event

Stadium Capital and Morgan Stanley provide “turnkey” approach:

• Financial advisory services, sports marketing and communications, legal, tax and

accounting analysis

• Stadium Capital compensation is “success-fee” based, payable only at closing

100 fans buying 3 seats generates $143 million

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ESR™ Example: Scalable ModelWhile the fan may purchase an ESR™ seat upfront, most will fund the commitment

over a period for up to 30 years.

Fan’s Perspective: Fan locks in fixed pricePer game ticket price (premium seating) $800

Annual season ticket (45 home games, incl. preseason) $36,000

Monthly payment (season ticket paid monthly) $3 ,000

Team’s Perspective: Team monetizes 30-year stream upfrontCapital raised PER seat $477,203

Financing Assumptions:Interest rate 6.5%

Payment period 30 years

Only the “best seats” and suites would be sold via the ESR

The Equity Seat Rights® Concept


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The ESR™ represents a contract and bond between the team and its fans. The specific

terms would be determined by the team.

The ESR™ owner – i.e., the individual fan or corporate ticketholder – is entitled to:

• Use of a particular seat for a specified set of events on an annual basis

• Ability to sell individual tickets to the ESR™ seat at the prevailing face

value, within team guidelines

• Ability to sell/transfer the ESR™ to another party at a free-market price,

within team guidelines

• Option to purchase ESR™ as a “group” (i.e., split investment amongst multiple parties)

The team (seller of an ESR™) is obligated to:

• Reserve the ESR™ seat for the fan into perpetuity

• Make the ESR™ seat available for all specified events

ESR is not tied to real estate – valid wherever the team plays

ESRs™ – A “Win-Win” Solution


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Benefits to Team

• Monetizes fractional interest in team while preserving economic and

governing control

• Increases value of franchise

• Unlocks capital for stadium expansion, investment opportunities, repayment of

debt obligations

• Creates a new “perpetual” bond with fan base and corporate sponsors

• Provides potential tax benefits – capital gain instead of ordinary income

Benefits to Fans

• Converts entertainment expense into appreciating asset

• Locks-in ticket cost at fixed price – after principal is paid, tickets are “free”

• Secures permanent preferred seating

• Provides liquidity on investment through secondary market

Both the team and the fan capture significant benefits, making it mutually beneficial

Comparison to Personal Seat License (PSL)


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The Personal Seat License imposes a mandatory surcharge…on a team’s most loyal

fans…to maintain the same rights as they owned prior to the PSL.

ESR™ is better than PSL for the fan:

• Ticket price is built into ESR

• Builds equity

• No ticket price increases

• Transferable

• New amenities

• Free tickets after 30 years

ESR™ is better than PSL for the team:

• Monetize 30-year revenue stream upfront (without creating new debt)

• Creates hedge against risk of team downturn or impact of “9/11” event

• Create long-term “bond” with fans

Fans will welcome the asset value and new benefits of the ESR ™ structure

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Structural ConsiderationsCertain restrictions may be imposed regarding the sale and ongoing ownership of the

ESR™ including:

Team / League Restrictions

• No sales to scalpers (somewhat self-mitigated by capital commitment required to pur-

chase ESR)

• No sales to fans that have been banned from stadium

General Restrictions

• Tickets must be re-sold by ESR holder (in most states) at the then prevailing face value

Since the ESRTM will be a contract between the team and the fan, appropriate provisions

can be instituted to protect the team’s interestsF INA

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Common Questions of ESR Buyers - What if…Scenario:

1. Team sold to new owner

Outcome: The ESRTM remains intact.

2. Team moves to a new stadium

Outcome: The ESR is transferred to a comparable seat in new

stadium – value likely to increase given anticipated

increase in demand from new venue.

3. League goes on strike

Outcome: The ESR owner is still required to make payments to

the bank – long-term value remains intact. Preliminary

discussions also indicate that the risk can be insured

against to provide additional comfort to fans.

4. Team/league goes bankrupt

Outcome: The ESR owner is still required to make payments to

bank

Common Questions of Owners


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Does the ESR program hurt the operating budget of the team? No.

• 95% of the seats are not impacted, along with the broadcasting, concessions, inter-

net, parking, merchandising and sponsorship revenues.

• The capital raised from the ESR program will be primarily used to strengthen the

financial position (deleverage) or be reinvested in the club to enhance the fan experi-

ence or team performance.

• The key is to use only a small number of seats, raise the prices significantly and to be

able to monetize the 30-year stream upfront.

Does the ESR program reduce the valuation of the team? No.

• The combination of the ESR offering and the ultimate selling price of the team will far

exceed what the club would have sold for without an ESR program.

• Typically an ESR offering of 5% plus suites will generate capital that will approach

the amount that the club was previously valued. At subsequent sale, the club will sell

95% of the seats and all other revenues.

• The ESR program allows the next best seats (non-ESR seats) to be priced much high-

er since they will be the “best available seats.”

Valuations have historically increased. Why not just take a long-term

perspective and raise prices each year.

• The ESR program provides the fan with a better value proposition thereby allowing

for a more legitimate reason to change the pricing paradigm. By providing the fan

with a “equity-like” asset, the team can re-price the product and avoid the stress of

the annual small ticket price increase.

• Quite simply, the ESR program is a hedge or insurance against a decline in team per-

formance, league strike, general economic downturn, or even from a “9-11” type of

event.

Turnkey Services Offered


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F INA

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Stadium Capital/ Morgan Stanley and its partners will provide the team and ESR™

holders with the following services to make this a successful offering:

• Investment banking advisory services

• Sports marketing and communication services

• Mortgage design and origination

• Legal documentation, tax and accounting analysis

• Fan analysis and sales support

Stadium Capital and its partners will prove broad support during the entire process

Pricing – 50 to 100% above current prices

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F INA

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Many teams will use this as an opportunity to reset the pricing structure to recognize

the enhanced value to the fan:

• Fixed pricing

• Free tickets after payment period

• Permanent preferred seating

• Enhanced services – parking, food service, food vouchers, special events and

access to club

• Potentially cushion seating with built-in television screen and internet access

Provides opportunity for significant price increase of tickets and accelerates the cash flow

from this increase for the next 30 years

Impact on Team Valuation -“Unlocking” Value

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F INA

NCE

Valuations will increase significantly due to the ESR™ structure

• ESR may generate, in certain situations, capital in an amount that is equal or exceeds the

current valuations with only a handful of seats – 90% of seats not encumbered

• ESR does not affect post-season ticket revenues, food, parking and concessions rev-

enues from the ESR seats

New revenue streams will replace the small number of ESR seats. In the last decade the

following new revenue streams have been generated or expanded

• Online services and products, PSLs, signage, naming rights, corporate suites, etc.

ESR provides the team with ability to increase value of assets

• Raise price for “best seats” due to ESR structure – higher value

ALL team valuations will increase (whether they implement ESR or not)

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Price Season Monthly Raised Seats Capital

Per Game Ticket Fee (per seat) Sold Raised

800 $ 35,200 $ 2,933 $ 466,599 1,000 $ 4 43,268,922

$ 300,000 $ 25,000 $ 3,976,695 125 $ 472,232,516

Net Capital Raised $ 915,501,437

Premium

seats

Suites

Financial Analysis

The following pages have been provided for illustrative purposes. A

custom model requires further ticket/fan analysis and team goals.

Financing Assumptions:

Pay periods per year 12

Number of years 30

Interest rate per year (1) 6.5%

(1) Interest rate w ill be determined based on market conditions at the time of the

funding

(2) In certain markets, it may make sense to sell suites broken into smaller units and

sold to individuals or converted into

club lounges attached.

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Estimated Cost

These figures have been compiled from existing and future entertainment and sports

complexes throughout the country.

Complex $ 400,000,000

Team ESR 200,000,000

Q-Street & R-Street Bridges 40,000,000

Parking Structures 40,000,000

R-Street Redevelopment 20,000,000

Electric Trolley 20,000,000

Train Landpark Station 15,000,000

Broadway Redevelopment 10,000,000

New Zoo Entrance 5,000,000

Subtotal Total 750,000,000

Additional Funds Raised To Go To City

Sacramento Unified School District 20,000,000

Sheriff Department 20,000,000

Police Department 20,000,000

Fire Department 20,000,000

City Deficit 20,000,000

Subtotal 100,000,000

Grand Total $ 850,000,000


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THE DREAM CONT INUESThank You For Your Consideration

Matt Haines

President

M&M Group

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