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Real Estate Investments Near Kings' Golden 1 Center Revitalizing Downtown Sacramento

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Professional sports in the 21st century are multifaceted operations, and a major aspect of these multi-dimensional entities is real estate investments. The recent New York Times story discussing the relocation of sports stadiums downtown addresses this in part.

When the centerpiece of these real estate investments is a brand-new sports facility, teams have increasingly been shrewd to make supporting investments near their shiny new home.

These additional investments, which typically can include things like restaurants, hotels, retail, office buildings, apartments or condos, make considerable sense because they can generate additional incremental revenue for the franchise every day of the year…even on nights when there are no events at the facility.

Enter Sacramento’s Golden 1 Center, and the Sacramento Kings owner, Vivek Ranadive.

Ranadive played an integral role in saving the franchise from relocation when he purchased the team in May 2013. A year later, the Sacramento City Council approved public financing to build a new basketball arena.

The facility opened in September 2016 at a final cost of $558.2 million, with approximately $223 million contributed by the City of Sacramento. However, through annual lease payments, the Kings will pay back the city more than the $223M contribution, at a minimum of $390m over 35 years, as well as property taxes on the arena.

All in all, these monies only begin to scratch the surface of the total investments which have been (and are still being) made in the broader area known as Downtown Commons.”

All in all, these monies only begin to scratch the surface of the total investments which have been (and are still being) made in the broader area known as Downtown Commons. For example, in October 2017, the Downtown Sacramento Partnership and the Greater Sacramento Economic Council released these findings:

  • The $1 billion investment in Golden 1 Center and Downtown Commons has built investor confidence in the city, and helped to drive nearly $1 billion in additional urban investment since 2015
  • Downtown property sales have totaled nearly $885 million since Golden 1 Center construction began.
  • In the last year, 11 downtown properties with more than 1.3 million square feet of space sold, totaling approximately $359 million.
  • Downtown employment grew 38 percent since arena construction began
  • 26 new ground floor retail businesses were created in the last year, with another 23 new businesses set to open in the coming months.
  • On average, foot traffic at 7th & K streets has increased by 51 percent on event days.
  • Golden 1 Center created more than 2,000 food and beverage jobs, accounting for over $31 million in wages, and nearly $79 million in new gross regional product.
  • Golden 1 Center also contributed $3.5 million to the region’s agricultural economy by activating local producers and sources for food, beverages and ingredients to serve arena guests.
  • In 2017, Golden 1 Center was ranked within the top 15 U.S. venues and in the top 40 worldwide in ticket sales, attracting over 1.6 million attendees who spent more than $71.5 million in downtown Sacramento.

As someone who has visited Sacramento annually over the last 10 years, from my vantage point, there is no question there is a palpable difference in the city’s downtown vibe, attitude, and economic activity. There is a burgeoning sense of pride, opportunity, and optimism, and slowly, the enhanced feasibility of working, playing, and living within the confines of downtown Sacramento only adds fuel to the city’s rejuvenation and momentum.

The Golden 1 Center has already established itself as a first-rate sports facility, aesthetically and technologically. As a result, the G1C won Sports Business Journal’s “Facility of the Year” award in 2017.

On Saturday January 6th, the Kings staff were kind enough to give me a tour of the ancillary developments around G1C to help showcase how much the area had transformed since my last visit to Sacramento in March 2017. Highlights of the tour, and additional sources of incremental revenue for the franchise, included:

  • The Sawyer Hotel, a quaint upscale boutique hotel located steps from G1C’s entrance
  • Punch Bowl Social, a fun restaurant with great games (including in-house bowling) and great food
  • Revival, a swank lounge complete with pool access
  • The Residences at The Sawyer, which provide a modern living experience for those who wish to be in the heart of the revival.

Not to mention the team's new offices located just above Revival, titled aptly enough in light of the urban transformations afoot.

That Ranadive’s ownership group reaps incremental benefits from all these developments reinforces how professional sports ownership today has very much become a real estate play.

Separately, as an economist reviewing all the data shared by Sacramento’s downtown development groups, I’d love to see in the future an independent financial analysis of the long-run cost-benefit analysis of these developments. In my experience with sports development projects nationally, it is not atypical for local development groups to inadvertently overstate net benefits of investments. Understandably, it’s hard for such groups to be completely impartial. Also, given that the consensus of most academic research on these types of investments often paint a pessimistic picture, it's easy to become a bit jaded when processing information shared by local partisan sources.

However, my own personal eye-test comparison of the transformation of what Downtown Commons looked like in November 2015 versus what it looks like now is shocking, compelling, and real. Consequently, I wouldn’t be surprised if a future impartial financial analysis confirmed my intuition.

Public-private partnerships can be necessary avenues to pursue economic growth for those cities who don’t have the same economic wealth as more affluent regions. In my opinion, sports venues have always had the potential to play a key catalytic role in jump-starting a region … but never in a vacuum. It takes a community built around it. It takes the confluence of creating places to work, live, and play which are compelling for both locals (who hopefully will now find the redeveloped region more compelling to visit) and non-local entertainment and sports rights holders (who hopefully will bring their events to town, thereby creating a net export of visitor tourism dollars to the region).

By building an award-winning facility and surrounding it with live/work/play accessories, Ranadive, the Kings, and the community have succeeded in transforming the narrative and economic outlook of Sacramento's future.

The franchise has become infinitely more valuable than the price Ranadive paid for the franchise in 2013 ($534 million…now valued at nearly $1.1 billion by Forbes).

And Sacramento’s downtown has become infinitely more attractive to visit for locals and non-locals alike.

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