Former Sacramento Kings Executives Say The Team Should Not Be Able to Profit Off the Pandemic
SACRAMENTO (CBS13) — Former Sacramento Kings executives say they are shocked that the organization is charging the state $500,000 a month to rent the shuttered Sleep Train Arena to be used as a field hospital for COVID-19 patients.
Former Kings Vice Presidents Tom Peterson and Mark Stone said they spoke with other VPs and former owners who, they say, shared their concern. They are calling on the Kings to keep with "the long-standing spirit of the organization" and return any profit it is making from the rental agreement back to the state.
They estimate that the Kings are profiting hundreds of thousands of dollars a month as, in their estimate, the cost to run the shuttered facility is a small fraction of what the state is paying to rent it.
When Governor Newsom first announced the Kings offered Sleep Train Arena to help house an expected surge of coronavirus patients, Peterson and Stone were not surprised. Like most, they thought that the Kings were donating the shuttered arena to the state for free.
"Giving back to the community, that was always emphasized in my experience there," Stone said.
"That was the tradition of the Kings, and what originally was Arco Arena," Peterson said. "It's a Sacramento tradition."
Between the two of them, they spent nearly 30 years with the Kings. Peterson was with the organization for 25 years under three different owners. Stone was there for nine years and was Senior VP of Arena Services under the Maloofs.
They say the Kings have a history of donating the facility, free of charge, during a variety of emergencies ranging from floods to Y2K.
So when they later learned the Kings were actually charging the state half a million dollars a month to rent the arena in addition to utilities and employee salaries, which the state also has to pay — "Everyone I talked to just couldn't believe it," Stone said.
"It seemed out of sorts from what our morals and core values were," Peterson said.
They said several other former VPs & owners were in agreement that if the Kings weren't going to donate the facility, they shouldn't be charging more than their cost. We asked how much they think the Kings should be charging under these circumstances.
"It seems to come down to around 20- or $25,000 a month," Stone said.
While Peterson and Stone left the Kings organization in 2006 and 2009, respectively, they said they've spoken with several other former executives who are still working in the industry. They say there was a consensus that the monthly expenses for the arena were far less than what the Kings are charging the state.
SLEEP TRAIN ARENA EXPENSES
CBS13 asked the Kings to disclose their actual monthly expenses for Sleep Train Arena, not including utilities and staffing that the state is paying for in addition to the $500,000 monthly rent.
The organization did not provide those numbers. However, CBS13 also asked how the Kings planned to use the money it is making on the arena during the pandemic.
In an email, a spokesperson said:
"The monthly lease amount for Sleep Train Arena (including 4,000 parking spaces) is a discounted rate. A portion of the monthly rate will go to offset annual costs associated with owning the property (which are over six figures monthly and over seven figures annually) and any revenue that the team will forgo (i.e. tenants renting space in the building or revenue from the parking lots) as a result of the surge hospital."
The Kings did not respond to follow-up questions about whether the reference "six figures monthly" included the utilities and salaries, which the state is paying above and beyond the $500,000 monthly rent.
Though, the team did note that:
"The alternate care facility is capable of housing up to 400 beds – approx. 25% of those beds (to serve COVID-positive patients) are located in the team's former practice facility adjacent to the arena which was provided to the state at no cost."
The organization added:
"The agreement has also enabled over 100 part-time Kings team members (i.e. engineers, janitors, food service workers and security officers) to return to work who were previously unable to work due to the state-mandated closure of Golden 1 Center. (These workers are in addition to the 300-400 healthcare professionals the state has hired to work at the facility.)"
However, the former VPs point out that the state is paying for those employees on top of the $500,000 rent.
A week after signing the initial monthly rental agreement, with a $2 million maximum, the state signed an amended agreement which increased the maximum payment to $3 million to cover the cost of paying staff wages in addition to utilities.
"They're not providing any of that. There's no real cost to them," Stone said. "It's like a money grab."
Peterson and Stone also pointed out, unlike previous ownerships, the Kings are now subsidized by the state.
CONSISTENT WITH OTHER CONTRACTS
Still, the Kings defend the rent stating:
"Per the state, our lease agreement for Sleep Train Arena is consistent with other similar alternate care facilities that have been created to support the growing medical needs of the COVID-19 crisis across California. We, however, are providing the use of the team's former practice facility at no cost. Our intent was, and is, to continue to use our platform for good and to help support our community."
The Kings pointed to a statement from Cal OES spokesman Brian Ferguson, where he said: "The arrangement with the Kings is consistent with what's being done at the other sites."
"I find it hard to believe," Stone said.
CBS13 requested copies of those lease agreements from the state, most of which appear to be for existing medical facilities, but we did not receive a response by our deadline on Thursday.
A spokesperson previously noted that the half-million-dollar rent at the arena works out to $41 per bed, per night for 400 beds.
"That explanation rings hollow for me," Stone said.
IN THIS TOGETHER
The organization points to its "In This Together" initiative.
"The Sacramento Kings, Stockton Kings, Kings Guard Gaming and Golden 1 Center have joined forces to educate, entertain, provide support and bring acts of kindness – or "Kings-ness" – to the community," a spokesperson said in an email.
A spokesperson noted that CBS13 has covered many of their efforts to give back and pointed to several examples of our own coverage ranging from a story about joint effort with the 49ers to donate face coverings for health care providers, to a story about donations of food and money from the Kings players themselves.
She also noted that the Kings were one of many teams that agreed to pay game-day workers through the month of March and that they donated nearly 3,000 pounds of excess stadium food.
"The King's Foundation does a great job right now. I'll tell you that," Peterson said.
Still, Peterson and Stone don't think the Kings should be allowed to profit off the pandemic.
"I wouldn't have been contacting you if the deal was covering their costs," Stone said.
We did point out to the men that the Kings are likely to make less money this year due to stadium fan restrictions and a shortened season if they do go back.
However, they said that few teams are profitable year to year and they note that many businesses will lose money, along with the state.
Here is the full list of the CBS13 stories cited by the Kings:
The NBA 2K League is set to start on May 5 as teams will compete remotely due to COVID-19. (4/28/20)
Harrison and Brittany Barnes are donating $40,000 for weekly groceries to people in need while also providing coffee and pastries for medical workers at Kaiser's South Sacramento Intensive Care Unit. (4/20/20)
Kings fans came together to show support for frontline health care workers on Wednesday night, which was supposed to be the team's regular-season finale. (4/17/20)
Cody Demps continues to stay ready amid the suspended G League season and took on a Kings Guard Gaming member in an NBA 2K20 game. (4/15/20)
A month since the Kings last game, Kings players are still taking action as Richaun Holmes, De'Aaron Fox, Bogdan Bogdanovic and Harrison Barnes are donating 1,000+ meals to local families. (4/8/20)
Coronavirus Help: Kings Players To Donate More Than 1,000 Meals To Community, CBS Sacramento, 4/8/20
Kings players have had to stay ready for the return of basketball on their own but that doesn't mean they aren't staying together in other ways. (3/30/20)
With Golden 1 Center effectively closed because of COVID-19, the Sacramento Kings had some food on their hands and decided to donate that food to the local community. The team gave nearly 3,000 pounds of food to the Sacramento County Office of Education and Sacramento Food Bank. (3/14/20)
The Kings are one of many teams who have said they will pay their game-day workers throughout the month of March. (3/13/20)