In the end, the owners get newer arenas, better leases and a bigger chunk of arena revenues from their current homes. Kansas City gets left with an empty arena.
Thirteen months from now, Kansas City's $276 million Sprint Center arena is scheduled to open. It will anchor downtown's $850 million Power & Light District. The city entered into a public-private partnership with Los Angeles' Anschutz Entertainment Group, which will operate the arena. AEG is a sports-industry goliath, with connections at the top of the NBA and the NHL.
The place will look like a giant, sparkling-glass radial tire. Inside, it's being built to specs for pro hockey and basketball, with the hope of convincing a team to change addresses.
Mayor Kay Barnes and AEG officials have offered assurances that a major-league hockey or basketball team will call the Sprint Center home by next fall. Barnes has even suggested that Kansas City could lure both. AEG President Tim Leiweke promises the arena won't go empty. "I can assure you, there is going to be an anchor tenant," Leiweke told The Kansas City Star in May 2004.
Meanwhile, the Star has printed these repeated promises without asking many tough questions about them. Instead, the paper has trumpeted speculation about what cities might be poached, including Seattle and Orlando, Florida.
In fact, none of the teams mentioned as possible Sprint Center tenants are still publicly discussing hanging their jerseys in Kansas City.
Several factors have worked against Kansas City in its bid to land a team.
· Experts say Kansas Citians don't have enough income to support another franchise.
· Neither the NHL nor the NBA appears interested in Kansas City.
· The competition is fierce, with cities such as Las Vegas and San Jose, California, likely to outbid any offer from Kansas City.
· Most damning, no local millionaire or ownership group has expressed an interest in buying a team, something crucial to landing a tenant in the Sprint Center.
The reality may seem clear. But like victims of unrequited love, city leaders and AEG officials have stubbornly refused to admit that they're growing desperate. he story of how seven teams passed up Kansas City could foretell the future of the quest for a Sprint Center tenant.
The responsibility for finding a team belongs to AEG. The city struck a deal with AEG in July 2004 and hailed it as risk-free to taxpayers. AEG would cover construction cost overruns and operating costs. The city reportedly had an in with AEG; Herb Kohn, a senior partner at Bryan Cave, the law firm that helped the city secure its contract with AEG, is a friend of the Leiweke family.
The first rumored possibility came in September 2004. Movie producer Howard Baldwin talked about buying the NHL's Anaheim Ducks and moving the team to Kansas City. However, the Walt Disney Company sold the Ducks in 2005 to an owner who decided to keep the team in California.
Howard Schultz, owner of the NBA's Seattle Supersonics, threatened to move his team in February. Schultz, who also is the chief executive officer of Starbucks, put the Supersonics up for sale in April, and the Star suggested that the team could be a tenant for the Sprint Center. But no Kansas Citian with deep pockets stepped up to bid.
Instead, Oklahoma City businessman Clay Bennett bought the Supersonics and the WNBA's Seattle Storm in July for $350 million. Bennett chairs a group trying to lure pro basketball to Oklahoma City, but he has said he'll keep the team in Seattle if he gets a new arena. The Kansas City Supersonics is a bust.
The New Orleans Hornets basketball team also looked ready to move a year ago. With that city's post-Hurricane Katrina economy wrecked and its population slashed, the Hornets needed a new place to play.
The Hornets considered a temporary move to Kemper Arena but ultimately chose Oklahoma City. But this summer, NBA Commissioner David Stern quashed any hope of the New Orleans Hornets moving. He said the Hornets will return to New Orleans for the full 2007-08 season. "It will happen," Stern told the Associated Press in August.
Rumors that the NBA Kings Kansas City's pro basketball team until 1985 would exit Sacramento, California, died in July. The team's owners and Sacramento County officials agreed to put a measure on that county's November ballot asking voters to approve a quarter-cent sales tax increase for a new arena. Even if voters reject the plan, the Kings are unlikely to cruise out of California because the team owns and operates Arco Arena.
In June, owner Paul Allen put the Portland Trailblazers on the market, leading to talk that the team could move to Kansas City. But without explanation, Allen took the for-sale sign down in August.
The Orlando Magic appeared to be a strong candidate. The team has a year-to-year arena lease. The Star reported that Magic officials contacted Kansas City in July 2005 about moving to the Sprint Center. But again, talk of a move to Kansas City or elsewhere became nothing more than a bargaining chip to get local officials to sweeten the pot to stay. Orlando Mayor Buddy Dyer announced in August a $350 million plan for an entertainment complex that will include a new arena for the Magic.
The team that seemed most likely to come to Kansas City appeared to be the NHL's Pittsburgh Penguins. The team went up for sale in January, and prospective buyer Sam Fingold suggested this May that he'd move the team here. Fingold, a 34-year-old Connecticut real estate developer, called Kansas City "one of the most under-served sports markets" in the country. Fingold told the Star: "I think Kansas City needs an NHL franchise, and I'd love to be the one to do it."
But Pittsburgh stepped up to keep the team. Isle of Capri has agreed to build a $290 million arena if the Pennsylvania Gaming Control Board awards the casino company a slots license. If that doesn't work, Pennsylvania Gov. Ed Rendell has devised a plan to pay for the arena with bonds that could be paid off by the Penguins in modest annual installments.
With those two offers on the table, getting the Penguins to Kansas City for next year's opening of the Sprint Center would be virtually impossible. NHL rules forbid a team from moving if there's a plan to stabilize a team in its current city, and NHL Commissioner Gary Bettman has said he favors keeping the Penguins in Pittsburgh.
On July 28, Fingold signed a letter of intent to purchase the Penguins for $175 million. At the same time, he backpedaled from his early interest in Kansas City. "We agree with the current ownership group that the Penguins should remain in Pittsburgh, and that a new arena is crucial to the team's long-term success," Fingold said in a statement released that night. "The Penguins are an important part of Pittsburgh's sports landscape, and it is our objective to do everything possible to secure their future here."
Last week, Fingold's deal to buy the Penguins appeared to be falling through, according to several media reports in Pittsburgh. The Star buried the news in a 415-word article on page nine of the sports section.
Despite the clear setbacks, AEG and Kansas City officials still talk of the Penguins and others as possibilities.
Kevin Gray, president of the Kansas City Sports Commission and Foundation, talks of the "golden opportunity" Kansas City has to land the Penguins. "We definitely respect the fact that the league wants to stay in Pittsburgh," Gray tells the Pitch. "But our belief is that right now, if the league wants to be successful and solidify a market, you can do that here right now."
The man offering more promises than anyone else, however, has been AEG's Leiweke. Leiweke is a familiar face on the Kansas City sports scene. In the '80s, he was general manager and later president of the Kansas City Comets, an indoor soccer franchise that began with promise and kept crowds flowing into Kemper Arena. Leiweke left the team in 1988 to work for the Minnesota Timberwolves NBA franchise; three years later, the Comets fizzled out.
Leiweke talked about a major tenant for the Sprint Center even before voters in August 2004 approved a hike in car-rental and hotel and motel fees to pay for the new arena.
Early on, Leiweke said the only question would be whether the Sprint Center's tenant would be a hockey team or a basketball team, according to the Star. He continued his optimism in July 2004. "If you build a world-class facility and create the economic streams for the franchise to thrive, you're going to get an NBA and an NHL team here," he told the Star.
More than a year after those initial comments, Leiweke said in September 2005 that either an NHL or an NBA team would be in the Sprint Center "when you open the doors," the Star reported. In November 2005, he played up the Penguins as a possible tenant. "The Pittsburgh Penguins can be the Kansas City Penguins," he told the Star, "no question about it."
Mayor Kay Barnes has kept up a cheery demeanor, remaining optimistic even as the list of possible teams has dwindled. In July, Barnes told the Star: "I am totally confident that AEG has been and will continue to do what is necessary to secure a NBA or NHL team or both for the Sprint Center."
The key words were "or both." Adding both would put Kansas City in league with the biggest sports markets Los Angeles, New York, Boston, Philadelphia and Chicago. But the city likely wouldn't be able to support teams in both leagues.
Barnes apparently wasn't aware of Kansas City's ranking as the No. 5 most overextended sports market in the country.
American City Business Journals, the parent company of the Kansas City Business Journal, analyzed 179 markets earlier this year to see if residents had enough income to support pro sports teams. The study found that Kansas Citians can't even support the teams already here. To support a hockey or a basketball team, Kansas City would need another $100 billion in personal income. "There's a new arena going up in Kansas City, inspiring brave talk about pursuing a franchise in the NBA or NHL," according to the report. "But the hard truth is that the city has already lost teams in both of those leagues."
The Star has provided a forum for Barnes and Leiweke to repeatedly stoke the speculative fires and make more promises. And the Star's headlines over the past two years have added to the rumors that several teams were Kansas City-bound.
The practice of reporting speculation hasn't let up, with the paper adding new teams and dropping others from the list of potential tenants. In a February 2005 story, the Star added the Florida Panthers, the Nashville Predators and the Carolina Hurricanes to its list.
In May 2005, Leiweke talked up meetings with the commissioners of the pro hockey and basketball leagues. Halfway through the story, NHL Commissioner Bettman trampled on Leiweke's optimism. "I have told Tim, as this stands right now, there is nothing to discuss."
So did NBA Commissioner Stern, who sounded as if he were dodging potential blame for an empty arena.
"We didn't tell them to go do a building," Stern told the Star in May 2005. The Star quoted him adding a joke: "Maybe they can have a WNBA team."
The Star still pondered potential relocaters the NHL teams in North Carolina, Nashville and Pittsburgh and the NBA teams in Orlando, Sacramento and Seattle.
After Leiweke's Penguins-to-Kansas City talk in November 2005, the league quickly refuted Leiweke's comments. NHL Deputy Commissioner Bill Daly smacked down the speculation, saying the NHL had "no current intention of either relocating an existing franchise or adding an expansion franchise." The next day, The Pittsburgh Post-Gazette quoted Daly as saying that Leiweke wasn't speaking for the league or the NHL board of governors. "It remains the league's strong desire to continue working with the Penguins and with local government officials to create an environment in which the Penguins can be successful in Pittsburgh for the long term," the statement read. "We have no interest in relocating the Penguins to Kansas City, or anywhere else, for that matter."
After the sale of the Supersonics, the Star's Randy Covitz told Kansas Citians to "relax." He added that it was "too early to panic." Covitz noted that talk of a move a year from now would be ludicrous season tickets still need to be sold.
Covitz declined to comment to the Pitch, and calls and e-mails to Star Managing Editor Steve Shirk were not returned.
Covitz's coverage of the search has reflected a faith in Leiweke's ability to get things done. Leiweke's résumé breeds such confidence. Leiweke sits on the NHL's board of governors. His company also owns the NHL's Los Angeles Kings and a stake in the Los Angeles Lakers.
The Star's editorial board has also given Leiweke a pass. An editorial in May 2004 showed the paper's full support: "Why doubt Leiweke?"
Even with a new stadium under construction, Kansas City will have difficulty finding a tenant, simply because relocation packages now require more than AEG and the city may be willing to give.
For instance, Kansas City might have landed the New Orleans Hornets last year, but Kansas City was outbid. With the New Orleans Arena wrecked by Hurricane Katrina, the NBA needed to temporarily relocate the team last season. League officials considered Kansas City and even toured Kemper Arena.
But then came an offer from Oklahoma City, which reportedly guaranteed Hornets owner George Shinn that his team would get a 5 percent bump in local revenue over the previous season in New Orleans. The city also picked up the tab for housing expenses, team offices and upgrades to its Ford Center.
AEG's Leiweke wasn't about to be outdone. "Whatever Oklahoma City gave away is minuscule in comparison to the opportunity for revenue in this marketplace for an anchor tenant," Leiweke told the Star in November 2005.
But Andrew Zimbalist, a professor at Smith College and a leading sports economist, doesn't see how that's realistic. He says AEG would have to offer a team low rent or none at all and perhaps all of the revenue from the arena. "So it doesn't seem like a promising situation," Zimbalist says. "I wouldn't be optimistic, if you were asking for my projection."
Neil deMause, co-author of the widely cited Field of Schemes: How the Great Stadium Swindle Turns Public Money Into Private Profit, wonders what the benefit would be to the city. "You've got a team, but you're not making any revenue off of your arena," deMause says. "You've just filled up 40 dates, and you're not getting anything from it." He says Kansas City and Oklahoma City could end up being "the cities that everybody loves to play footsie with."
Vacant arenas can become nothing more than leverage, according to deMause. "Probably every other team in the nation was thrilled when KC decided to build this arena. It's a win-win situation for them," deMause says. "Either they can think about moving there and reaping the benefits of the new place, or they can just use it as a threat."
Gray, with Kansas City's sports commission, dismisses the idea that Kansas City has become a bargaining chip. "They're not going to jack around with AEG," Gray says. "AEG is an 800-pound gorilla. The leagues won't play around."
Anyone wondering what AEG and the city might offer a franchise need only look at the NBA's Grizzlies' move from Vancouver, British Columbia, Canada, to Memphis, Tennessee. With his team only six years old, but having suffered a reported loss in 2001 of $13.3 million, Grizzlies owner Michael Heisley began making eyes at several cities. Heisley's decision to put his team in Memphis made the Grizzlies the smallest-market team in the NBA.
Forbes magazine valued the Grizzlies at $294 million in December 2005. But to get the team, Memphis offered Heisley a package worth more than $400 million. The city of Memphis and Shelby County pledged $250 million for a new arena, Federal Express added $90 million for 20-year naming rights, and a local ownership group agreed to buy a minority stake in the team.
Even if Kansas City were willing to part with all of the stadium income, AEG would likely still need to find a local owner. That's something that AEG and the city have been unable to do.
Stepping up comes with a hefty price. Forbes valued each of the 30 NBA teams at an average of $326 million. NHL franchises range from $65 million for the Carolina Hurricanes to $325 million for the Toronto Maple Leafs, according to the magazine.
Last month, Barnes told the Star that finding a local ownership group isn't impossible. "That may be part of the equation," she said.
Gray, meanwhile, isn't so optimistic. He knows that the Chiefs and the Royals have out-of-town owners. "We tried [to find] local ownership," Gray admits to the Pitch. "We just don't have anybody in this market that's going to step up like that, in my estimation."
AEG faces no consequences if it fails to bring a team to Kansas City. The arena management company won't default on its contract with the city as long as the city continues to believe that AEG is doing a good job looking.
AEG invested $50 million in the Sprint Center's construction and signed a 35-year management agreement to operate the arena. The contract calls for AEG to "use all reasonable efforts" to lure a team to Kansas City within three years "at no cost to the city."
In fact, if AEG does find a tenant, it may lose money. AEG gets all of the revenue from the Sprint Center's 72 luxury boxes and club seats at events such as circuses and college basketball tournaments. If it finds a tenant, AEG would likely have to give up some or all of that revenue.
Every luxury suite has already sold out, at an average price of $110,000. In a remarkable show of blind faith, corporations and wealthy Kansas Citians have opened their pocketbooks for the suites, even though they have no idea what events they'll be attending. AEG will collect more than $7.5 million a year.
The Pitch recently requested interviews with AEG representatives to detail what efforts they've made to bring a team to Kansas City. Michael Roth, AEG vice president of media relations, responded in a conference call with Sprint Center General Manager Brenda Tinnen. At times, they seemed optimistic that a team would come. Other times, they hinted that it wouldn't happen as promised by next fall.
AEG won't reveal which teams are in discussions with Kansas City. Roth said during the conference call that the secrecy is "out of respect for the cities where they already play and out of our agreement that we have with the leagues." But Roth assured the Pitch that "numerous discussions" have taken place between AEG and prospective NBA and NHL owners about relocating to Kansas City. "There has not been a single franchise that would ultimately be sold or moved that hasn't had discussions with representatives of Sprint Center," Roth said. "And furthermore, with the NBA and NHL clearly being aware of the Sprint Center, they are playing a role in properly positioning the building to teams that are realistically looking to move."
AEG has begun to press the city to consider a pro women's basketball team or a minor-league hockey team, Gray tells the Pitch.
Arena Football also remains a possible and unheralded tenant. Kansas City Brigade spokesman Rob Thomson tells the Pitch that the Brigade has had talks with AEG about moving from Kemper Arena to the Sprint Center. "The Kansas City Brigade and the Sprint Center have been communicating regularly about teaming together, and both sides feel very good about the direction it is headed," Thomson writes in an e-mail to the Pitch. "Although nothing is official yet, we are encouraged a deal will be completed and we certainly are excited to bring Arena Football and our passionate fans into the Sprint Center in 2008."
Gray says the deadline of getting a big-league team by October 2007 is realistic if the team is the Penguins even though the chances of the Pittsburgh team moving to Kansas City have seemingly come and gone. "With anything else, probably not," Gray says.
In the recent interview with the Pitch, the Sprint Center's Tinnen sounded less hopeful. "Ultimately, it takes a little work, a couple of years to land a franchise, and we ultimately want to make the right deal with the right team for Kansas City," Tinnen says. "Ultimately, optimistically, it would be great to have a team for '07, but it may be the beginning of '08 before we get one. I just can't predict that."
When asked if any major announcements were on the horizon, Tinnen responded somberly: "No." She paused for a second and then added, "Not at this time."