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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.
3
Arena
Grand Terminal
Outdoor Terrace
Pedestrian Walkway
Electric Trolley
Street
Railroad/Lightrail
Train Platform
Public Gathering
Box Of�ce
Existing Riverwalk
Trolley Platform
4
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)
SACRAMENTO RIVERFRONT ENTERTAINMENT & SPORTS COMPLEX
PROP
OSAL
GRO
UP
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SACRAMENTO RIVERFRONT ENTERTAINMENT & SPORTS COMPLEX
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
DEVE
LOPM
ENT
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.
SACRAMENTO RIVERFRONT ENTERTAINMENT & SPORTS COMPLEX
PROJ
ECT
LOCA
T ION
& S
I TE
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SACRAMENTO RIVERFRONT ENTERTAINMENT & SPORTS COMPLEX
• 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
SACRAMENTO RIVERFRONT ENTERTAINMENT & SPORTS COMPLEX
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.
SACRAMENTO RIVERFRONT ENTERTAINMENT & SPORTS COMPLEX
PARK
ING
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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.
SACRAMENTO RIVERFRONT ENTERTAINMENT & SPORTS COMPLEX
TRAN
SPOR
TAT I
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SACRAMENTO RIVERFRONT ENTERTAINMENT & SPORTS COMPLEX
1 0 M
OST
POS I
T IV E
EF F
ECTS
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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SACRAMENTO RIVERFRONT ENTERTAINMENT & SPORTS COMPLEX
ADD I
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ONST
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ION
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.
SACRAMENTO RIVERFRONT ENTERTAINMENT & SPORTS COMPLEX
PROP
ERT Y
CON
TROL
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F INANCE
F INA
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SACRAMENTO RIVERFRONT ENTERTAINMENT & SPORTS COMPLEX
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
SACRAMENTO RIVERFRONT ENTERTAINMENT & SPORTS COMPLEX
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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
SACRAMENTO RIVERFRONT ENTERTAINMENT & SPORTS COMPLEX
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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)
SACRAMENTO RIVERFRONT ENTERTAINMENT & SPORTS COMPLEX
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SACRAMENTO RIVERFRONT ENTERTAINMENT & SPORTS COMPLEX
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
F INA
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SACRAMENTO RIVERFRONT ENTERTAINMENT & SPORTS COMPLEX
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
NCE
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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
SACRAMENTO RIVERFRONT ENTERTAINMENT & SPORTS COMPLEX
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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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SACRAMENTO RIVERFRONT ENTERTAINMENT & SPORTS COMPLEX
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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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SACRAMENTO RIVERFRONT ENTERTAINMENT & SPORTS COMPLEX
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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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SACRAMENTO RIVERFRONT ENTERTAINMENT & SPORTS COMPLEX
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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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SACRAMENTO RIVERFRONT ENTERTAINMENT & SPORTS COMPLEX
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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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SACRAMENTO RIVERFRONT ENTERTAINMENT & SPORTS COMPLEX
THE DREAM CONT INUESThank You For Your Consideration
Matt Haines
President
M&M Group
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