At a time when Californians are experiencing brutal tax increases and cuts to vital services, it’s unthinkable for the state to secretly give away a billion-dollar asset to wealthy sports team owners.  But that’s exactly what might happen.  It’s corporate welfare gone pro.

Cal Expo – the publicly-owned home of the state fair and harness racing venue – is exploring a deal with the National Basketball Association to build a new “Entertainment Venue” as part of potential $1.6 billion deal.  The arena portion is estimated to cost as much as $700 million and would be essentially given "free" to the billionaire owners of the Sacramento Kings.

Now, I love having a professional sports team here in Sacramento.  I go to games, concerts and other activities at the current ARCO arena (pejoratively referred to as Echo Arena.)  But public assets should be for public benefit, not corporate welfare for billionaires or to build pricey playgrounds for those who can still afford to buy a ticket.

CalExpo has already spent $200,000 for consultants to study how to give the NBA and the billionaire owners of the Kings an arena that is essentially paid for by taxpayers– without a vote of the public, or even by their elected representatives.

I talked to a few experts who believe the risk to taxpayers might be even bigger than just giving away a billion dollars worth of riverfront property: they suggest that taxpayer-backed bonds would be needed to guarantee loans – gobbling up bond capacity and leaving taxpayers at risk to if developers default on loans or the project falters.

It’s hard to do a very detailed analysis, since most of the details are still unclear, unknown or being kept out of the public light.  This deal, which proponents candidly admit is way to finance a mega-million dollar deal without a public vote, needs more sunshine. 

I am a strong proponent of public-private ventures that provide mutual benefits.  But the first priority must be protecting taxpayers, not guaranteeing profits for wealthy sports team owners.  Under-utilized assets should be examined for better use (like Senator Denham’s bill to study redeveloping San Quentin.)  But if CalExpo never studies other options, taxpayers are getting short-changed.

The last deal; pushed by the Sacramento City Council and County Board of Supervisors (with the exception of Roberta MacGlashan who opposed it); was resoundingly rejected by voters.  Aside from the problem of gifting over a half-billion dollars to the billionaire owners of the Kings, the public was frustrated by the one-sided nature of the deal – giving the Kings organization virtually all the control and profits while sticking taxpayers with all the risks and all the bills.

Asset management is not a strength of state government.  Millions of dollars in waste have been well chronicled – everything from expensive leases for empty offices to million dollar makeovers for state offices and high-paid appointments for out of work politicians.  Doing a better job of managing assets can alleviate some of the burden on taxpayers and vital services.

Since CalExpo is a pubic asset – albeit governed by an independent board – state lawmakers should be keeping an eye on this deal to ensure taxpayer interests are protected. 

I expect an enterprising Legislator might find a way to do just that.

This entry was posted on Friday, May 8th, 2009 at 12:00 am and is filed under Blog Posts.