Kunal Merchant occupies a fascinating perch in the Green-Sports world. A member of the Green Sports Alliance board, the Bay Area-based Merchant has a background in business, politics, and social enterprise. And as co-founder of Lotus Advisory with his sister Monisha, Merchant has guided the sustainability efforts on state-of-the-art green stadium and arena projects, from Sacramento’s Golden1 Center — the first LEED Platinum indoor arena in the world — to the nascent Oakland A’s ballpark project.
GreenSportsBlog spoke with Merchant about his work on Green-Sports projects, with the Alliance, and where he sees the movement heading.
GreenSportsBlog: Kunal, I can’t wait to dig into your story which takes place at the intersection of sports, politics, and sustainability. Nothing juicy there…
Kunal Merchant: It has been a fascinating ride to this point, Lew. I came to the sports world from the political side, working as Chief of Staff for then Sacramento Mayor and ex-NBA All Star Kevin Johnson. I served in that role during his first term, between December 2008 and June 2012, which was a dramatic time. The Mayor took office right as the national economy was entering the Great Recession. Sacramento was particularly hard hit by double-digit unemployment and a foreclosure crisis. Morale was low, and right when the town thought it couldn’t get any worse, we found out that our beloved Sacramento Kings – the one and only pro sports team in town – wanted to leave town.
The team had been struggling both on and off the court for years, including several failed attempts to build a new arena to replace what had by then become the oldest and smallest arena in the NBA. The Kings’ ownership felt that their best shot was to start over in a new city, with Seattle being the most likely destination. It was a punch to the gut for Sacramento, and in the Mayor’s office, we knew that how Sacramento responded to this challenge would have implications far beyond sports for the city’s economic and civic identity.
GSB: So how did you go about dealing with the significant headwinds?
Kunal: That’s a topic for a much longer conversation! But, oversimplified, there were three key checkboxes on our “to-do list” to save the team: (1) prove that Sacramento was a viable NBA market; (2) recruit a new ownership group willing to buy the team and keep it in Sacramento; and (3) develop a plan to build and finance a new arena. The arena was arguably the most critical – and difficult item – particularly since, for a market the size of Sacramento, some form of public investment was going to be needed.
Taxpayers were understandably skeptical about putting public money towards a basketball arena. But after studying similar situations around the country, we in the Mayor’s Office concluded that, under the right terms and structure, we could deliver a public-private partnership for a new arena that would be a win for the Kings and for Sacramento. To get there, we needed to generate transformative economic and community benefits, something that was only possible if we used the arena to anchor the broader revitalization of our blighted and long-underperforming downtown core.
In that respect, Sacramento really reminded me of the Denver of my childhood in the 1980s. At that time, Denver was perceived as a classic “flyover city” by people on the coasts. But over several years, the community and city leaders pushed through smart and strategic investments that led to a positive change in the city’s economic and cultural trajectory. Things really took off in the 1990s, in part due to the energy generated by Coors Field, the downtown ballpark built to be the home of our new Major League Baseball team, the Colorado Rockies.
Kunal Merchant, co-founder of Lotus Advisory (Photo credit: Lotus Advisory)
GSB: I remember visiting Denver during the late 1990s and saw how Coors Field had seemingly changed a whole neighborhood. Was the ballpark built by the team, the city or some combination? The reason I ask is that there are many studies showing that public investments in sports venues are not efficient uses of the public’s money. Where do you come down on that question?
Kunal: Great question. Like a stodgy and aging arena, I think the rhetoric around public financing for sports venues is in serious need of an upgrade. There’s way too much dogma on a topic filled with nuance.
In the case of Coors Field, the project was a public-private partnership, where taxpayers made a significant investment. As a local resident who saw that area before and after Coors Field, I would argue that the taxpayers’ investment paid off handsomely in catalyzing a true economic and cultural renaissance that continues to this day.
But the success of Coors Field doesn’t vindicate all forms of public financing. The reality is that every situation is different, and plenty of sports facilities – too many I would argue – receive public funding in amounts and terms that are truly terrible deals for the public. When we were developing the Kings arena deal, we studied up on the good, bad and ugly of prior public subsidy deals. And we were determined that any arena deal we cut with the Kings would protect taxpayers and generate strong economic and community benefits.
That process in Sacramento began by fighting to locate the new arena downtown, and resist temptations by some in town to “play small” and simply refurbish or rebuild at the old arena’s suburban location.
GSB: The old Arco Arena is north of the city, kind of by itself off of I-5.
Kunal: Yes. At the time it was built in the mid-1980s, that building size and location made sense. But by the 2010s, we had different civic imperatives around sustainability and urban planning. Beyond the economic appeal of a downtown location – analysts forecasted $150 million in new annual economic activity each year – we wanted the arena project to reflect the values of a community that cared deeply about the environment. So we set – and ultimately met – incredibly ambitious goals for green design, air quality, water efficiency, energy efficiency, transit, food, waste diversion, and so on.
GSB: What was your role in the project?
Kunal: My role evolved over the course of the project. At the start, I was the Mayor’s Chief of Staff, representing the Mayor and City in almost every facet of our work with the NBA, Kings, City and community to save the team and develop the arena plan. When the NBA voted to keep the team in Sacramento in May 2013, and approve the sale of the Kings to a new ownership group, I moved over to the team side as an executive focused on making sure we followed through on our promises to the community on the arena.
That meant finalizing the public process to approve the deal, negotiating key labor and community benefit agreements, and continuing to engage the community in this truly once-in-a-generation project. It also meant championing what became the most ambitious sustainability agenda of an NBA arena to that date, anchored around achieving status as the first-ever LEED Platinum indoor sports arena.
GSB: That’s quite a transition. How did working for a sports team differ from working in municipal government?
Kunal: Well, it’s safe to say that spending a Tuesday night at an NBA game is a bit more fun than at a City Council meeting! And I used to joke with friends – only half-kidding – that I could get more done chatting with various folks at a Kings game than I could ever do in one month at City Hall. There were obvious advantages to working in a private sector context in terms of speed, agility, and efficiency. But this deal was a true public-private partnership where both bodies were integral. What’s most powerful to me is that my spirit and purpose on this project never changed regardless of what my business card said; from beginning to end, this endeavor was always about doing something really big and historic and transformative for the people of Sacramento. And both the City and Kings wholly embraced that mindset.
GSB: What did you do after the arena took shape?
Kunal: As Opening Day for the Golden 1 Center got closer, I started getting calls from other folks in sports who were impressed by what we’d done in Sacramento and wanted to see if I could help out elsewhere. To his credit, then-Team President Chris Granger was extremely supportive, and I was able to transition from being a full-time employee to a consultant able to take on other work. As part of that transition, I launched Lotus Advisory with my sister Monisha as a strategy and management consulting firm focused on driving positive change at the intersection of business, government and community. Because of my background, I ended up specializing quickly on sports-related projects, while my MIT-educated sister took on high tech clients like Airbnb. In the years since, we’ve been lucky to work with an amazing range of clients in a variety of industries and sectors.
Kunal Merchant touring construction of the Golden 1 Center and the Downtown Commons in 2015 during his time as a Sacramento Kings executive. The $1.5 billion dollar project includes a LEED Platinum NBA arena, hotel, and retail and entertainment district that has been the primary catalyst behind the new economic and cultural renaissance unfolding in Sacramento’s long-struggling downtown core (Photo credit: Lotus Advisory)
GSB: What are some the sports projects on which Lotus Advisory has worked?
In recent years, we’ve done a lot of work in soccer and baseball. I was the Chief Strategist for Nashville’s successful 2017 bid to join Major League Soccer, where we went from being on no one’s radar as a viable soccer city to finishing first in a twelve city race for the next expansion slot. A huge part of our success was powered by the people of Nashville – whose pride in their city is as strong as I’ve ever seen anywhere.
Similarly, I helped lead and advise Sacramento’s bid to join MLS for several years, particularly in shepherding their downtown stadium development plan through the planning, predevelopment and approval processes. The heart and soul of that bid are the supporters of Sacramento Republic, the United Soccer League (USL) Championship¹ club that took the city by storm when it launched in 2014 and has woven itself deeply into the cultural fabric of Sacramento with remarkable speed.
Currently, I’m working closely with the Oakland Athletics on their plans to revitalize the Oakland waterfront with a new privately-financed ballpark district near the Jack London Square area. It’s a really gorgeous project with a strong spirit of sustainability and environmental justice.
GSB: Very cool! What’s the status of Sacramento’s MLS bid? I know they’re looking to get to 28 teams by 2021 or 2022. Cincinnati United began play this month as the league’s 24th club, with Miami and Nashville set to join next year and Austin in ’21. So that means there’s one more slot left in the near term.
Kunal: Sacramento is one of two cities considered to be favorites for the 28th slot. I know that I’m biased, but I don’t think the competition is remotely close. Sacramento’s MLS bid stands alone as arguably the most resilient, mature, and comprehensive MLS bid in league history. Since embarking on the MLS journey in 2014, Republic FC has checked all the boxes time and again: a die-hard fan base, committed corporate support, a fully-approved and transformational downtown stadium plan; and a credible and committed ownership led by a formidable combination of Pittsburgh Penguins owner Ron Burkle and several local business leaders. MLS will be lucky to have Sacramento join its ranks and I’m cautiously optimistic that it will happen soon.
GSB: Good luck! When will the new stadium be ready and what are some of its green features?
Kunal: Obviously the MLS stadium is contingent on entry into the league, but the stadium could likely be ready by either the 2021 or 2022 MLS season. As impactful as the Golden 1 Center is for Sacramento, the MLS stadium for Republic FC will be a game-changer in its own right.
The stadium will be built few blocks away from the Kings arena at a huge 240 acre site called the Sacramento Railyards that, when fully built out, will double the size of downtown Sacramento. The MLS stadium represents one of the first and largest major private investments in the Railyards in several decades, and will catalyze a historic wave of economic and community development. In terms of green features, the stadium will be another model of transit-oriented development, located a block from light rail, and a short distance by foot, bike, scooter, or rideshare from the rest of downtown. Republic FC has a terrific culture around local food and beer, so I’d expect some innovative sourcing strategies there as well.
Artist rendering of proposed Major League Soccer stadium in downtown Sacramento. The project will anchor an estimated $5B economic revitalization effort at Sacramento’s historic Railyards district (Credit: Sacramento Republic FC)
GSB: Turning to another long-running new stadium project, let’s talk about the Oakland A’s.
Kunal: The A’s have a truly visionary plan to revitalize the waterfront near Jack London Square through a new Major League Baseball ballpark. The project will be LEED Gold Certified and reflect a “ballpark within a park” theme, with an intimate 34,000 seat stadium nestled carefully into its urban surroundings. The ballpark is privately-financed and will anchor a new, vibrant waterfront district that will feature a mix of housing, including affordable housing, offices, restaurants, retail, small business space, parks and public gathering spaces. And the team is also showing tremendous leadership by leveraging the ballpark project to address longstanding environmental justice reform issues around air, soil and water quality faced by West Oakland residents for years.
Preliminary artist rendering for the proposed Oakland A’s ballpark near Jack London Square in Oakland. The project will be LEED Gold and reflect the A’s strong commitment to sustainable development and environmental justice (Credit: Oaklandballpark.com)
GSB: Add the A’s new ballpark to my sports bucket list. OK, before we go, let’s talk a bit about your work as a board member of the Green Sports Alliance. How did that come about?
Kunal: I’ve known and been a fan of the Green Sports Alliance since its earliest days, when Alliance leaders reached out to invite Mayor Johnson to the inaugural summit in Portland. The Alliance was hugely helpful in guiding my thinking on the Golden 1 Center, and I worked with the Alliance to help bring the Summit to Sacramento during the Golden1 Center’s inaugural season in 2017. I’ve continued to work closely with the Alliance since then, and at some point it just made sense to take on a more formal role. So, I joined the board last fall with a pretty important first project: co-leading the search for a new Executive Director. It was a fascinating process that yielded a terrific hire: Roger McClendon.
GSB: McClendon comes to the Alliance’s executive director role at a key inflection point in the Green-Sports movement. I like to say Green-Sports 1.0 — the greening of the games — is now almost if not quite a given. It was a necessary and obvious first step. But Green-Sports 2.0 — engaging fans, players and more to take positive environmental action, specifically on climate change — which is where I think is starting now, is a more complicated, heavier lift. What do you think?
Kunal: I totally agree. There are fundamental questions facing the green sports movement and the broader environmentalist community at the moment. The science around climate change grows more dire by the day, with the recent IPCC report advising that humanity has really just a handful of years left to aggressively decarbonize or face catastrophic consequences. So the cost of inaction is escalating. With that as backdrop, the Alliance is asking ourselves: what are we going to do? Our ethos has been to meet people where they are. Which means that if a league, an event, a team is aggressive on climate, we’ll support them. If they’re going slowly…
GSB: …Or not even talking climate at all?
Kunal: …we’re not going to push them too far beyond their comfort zone.
GSB: But doesn’t that imply that it’s ok for sports not to go fast enough? That seems risky at best.
Kunal: Well, it’s tricky. But here is a reason to be optimistic: things are impossible until they’re not. Looking at history, there are many social movements that looked bleak for years, or even decades, right until a period of rapid change that completely upended the status quo. I’m heartened by the younger generations — Millennials and Gen Zers — who will increasingly hold all institutions, including sports teams, accountable for the issue of climate change. The Alliance needs to be ready, and I think we’re taking important steps in that direction. If there’s one thing that I’ve come to appreciate deeply in my career, it’s that, with vision and leadership, sports can be an extraordinary platform for positive change. And on issues of climate, we can’t afford for sports teams, leagues, or fans to sit on the sidelines anymore.
GSB: With some well-timed and positive pushing from organizations like the Alliance, I’ll say. To be continued, Kunal!
¹ The USL Championship is the second-tier of North American professional soccer, one level below MLS.