Kings likely staying put in Sacramento for 2011-12

All signs are that the Sacramento Kings‘ move to Anaheim is falling apart, even after getting a two-week extension on submitting their relocation plan to the NBA. According to Sports Illustrated’s Sam Amick:

Sources say the Anaheim presentation given at the meetings was as ineffective as Johnson’s was impactful, and there is serious doubt as to whether there will be enough support to warrant the Maloofs filing for relocation (a majority vote is needed to approve a move when a team files).

Specifically, a source with knowledge of the proposal revealed that the television rights riches that had long been seen as a major motivating factor for the Maloofs aren’t quite as lucrative as they had hoped. … The plan as presented in New York included a possible partnership worth $20 million annually with KDOC, an Orange County-based, independent television station that is co-owned by the very man working so hard to make this move happen. Anaheim Ducks owner Henry Samueli, who operates the Honda Center where the Maloofs’ team would play and has already committed $50 million through city bonds to help cover their cost of relocation, reportedly teamed with Bert Ellis to pay $149.5 million for the station in 2006.

In other words, part of the deal for the Kings to move to Anaheim would be to give their new landlord a cut-rate TV deal, far below what league officials were figuring the Kings could earn from Fox Sports West, which was recently spurned by the Los Angeles Lakers. Amick notes that this could help explain NBA commissioner David Stern’s recent remarks that one reason for extending the relocation application deadline until May 2 was concern over “certain areas having to do with the contractual relationship between Mr. Samueli’s organization and the Kings, having to do with the building, having to do [with] television revenue.”

Meanwhile, a Sacramento group is expected to soon have enough signatures to force a $75 million Anaheim bond sale for arena upgrades to a public referendum, which couldn’t happen until 2012. The Kings and Samueli could then try to find an alternate way of raising the up-front cash, but as we’ve seen before, finding financing structures that work can be tricky — which is, no doubt, why they proposing using city of Anaheim bonds.

Kings owners Joe and Gavin Maloof are still reportedly planning to file for relocation on May 2, but it’s hard to see that happening if the writing is on the wall that the NBA won’t approve a move until more is known about both Samueli’s role (including that possibly never-signed lease) and the possibility of a local Sacramento buyer. This isn’t necessarily a disaster for the Maloofs, the Kings, or the NBA — as I’ve said before, the whole point of a move threat is to play two cities off against each other in bidding for the rights to host your team, and that certainly seems to be happening here. But it could make for a long, ugly maybe-lame-duck season in Sacramento for the Kings next season — if there is a season.

28 comments on “Kings likely staying put in Sacramento for 2011-12

  1. Oh, Neil, Neil, Neil, there’s so much of this to dispute, it’s hard to know where to begin. But I’ll try.

    The Maloofs do not want to stay in Sacramento. Of all the factors I’ll mention, this could be the biggest one of all. The deal is that the Maloofs are in financial distress, and they’ve found a potential white knight in Samueli. It’s so easy to say the Maloofs can go with local owners, but there are no local owners with the kind of resources it would take to own an NBA franchise. So, fine, go with Burkle. But what do we know about Burkle’s “offer”? What if it’s $100M less than a deal that has been privately discussed with Samueli? How can we ever know?

    And all of a sudden, a local, treasured (in LA) franchise is available — the Dodgers. If Burkle can only afford one more franchise and it comes down to the Dodgers and one of the NBA’s “filler” franchises, who do you think he’d go with? That’s a laughably easy question to answer. Point being, there is no possible way Burkle would propose to purchase the Kings, at Anaheim market value, in the next few days.

    Part of Amick’s report has already been debunked, but I notice you don’t refer to it here: The NBA has not told the Kings to get their season ticket packages ready. My point here is that the Amick report lacks credibility; if one of its major points has been debunked, then it’s safe to say the rest of the report is in question. I wouldn’t hang my hat on this report.

    As for the TV deal, if Samueli is requested to up his TV deal, if he really wants to buy the team, he’ll up the TV deal. Why? Since he owns the station and (in effect) the arena, he’ll raise the TV offer to whatever it takes to satisfy the NBA; then, when he does own the team (probably within 3 years), he’ll just renegotiate the TV offer to whatever he wants. Free? Why not? It’s his team, his arena and his TV station.

    I’ll also go on record as noting that the petition drive in Anaheim is very sleazy. I hope Samueli does the same thing in Sacramento. I don’t know what the rules are to force a public vote on bond issues in Sacramento, but if Samueli starts a petition drive to force a local vote on whatever tax hike KJ dreams up, I would love to be the first to sign. I’ll help with the recall, too.

    The Maloofs don’t want to stay. Forcing them to stay will result in mysery and lawsuits. Why would Sacramento residents want that?

  2. Mike, nobody is saying the Maloofs want to stay in Sacramento, or that Burkle is going to buy the team in the next week and a half. But all it takes for the team to stay put for 2011-12 is enough uncertainty for the other NBA owners to say, “We want to hear more – let’s hold off on a decision until next year.” And it looks increasingly likely that that’s going to happen.

    Will the Kings end up in Anaheim eventually? Quite possibly, though to be honest, it sounds like Samueli is trying to squeeze every last penny for himself out of the deal, which isn’t going to make the NBA very happy. (Wayne Huizenga of the NBA, anyone?) Will it happen in time for next season? At this point, I’ll be very surprised if it does. Unless the next season is the 2012-13 one, that is.

  3. I think the looming lockout has put the crimp on the Kings’ transfer. Who wants to promote a product that could be gone for a season or so?

    At this point, I think the NBA and the players are headed toward an NHL style labor showdown. Of course, now that the players have been paid for the season, why not strike now?

  4. The Kings will stay for good up in Sacramento. Stern will not let them go to Anaheim this season and during this upcoming season something big will happen in efforts to getting a new Arena built. After the huge scare of losing the town’s pride and joy, Sacramento won’t let it happen again and they will figure out something to keep the team in town. A new Comcast TV deal is going to be re-negotiated and more money is coming in & things will come together for the financing and planning of a new Arena. There is Hope in Sacramento when there wasn’t much of it a few weeks ago.

    Sacramento LOVES the KINGS. When they arrived in town the Kings sold out their first 497 games in a row, over a span of 12 seasons!!! And that was when the Kings were Bad back in the day. And then the Kings got really good a won 50+ games for 5 seasons in a row, in which they had another streak of selling out 354 games in straight. Good or Bad the town LOVES the Kings and if it were not for a downturn in the economy, an aging arena and a couple swinging-dick owners none of this nonsense would be happening. I wish the GREEDY Magoof’s would just sell the team to a Northern California buyer and leave town for good.

  5. CJ, Sacramento loves the Kings?

    Remind me: How’d that Q&R thing work out. I can’t remember.

    I very strongly believe what you’re seeing now is a city in panic (Sacramento) trying to retain its team (and that is understandable). But the Maloofs REALLY NEED Samueli. People are ignoring this part of the equation. You can’t. It’s the elephant in the room.

  6. Yes Sacramento does love the Kings and that is why they will stay where they will be supported best, in Northern California. Moving to Southern-California would be a death wish. A 3-Team market where everyone will just end up paying attention to the Lakers. Sacramento will stay for this next season and while doing so, some big investors will make their presence known.

  7. CJ: The Maloofs finances and Samueli as a white knight are the elephants in the room.

    Address these two issues first. Nothing else matters.

    If the Maloofs could find a financially viable way to stay in Sac, they would probably do it. But they can’t. That’s why the Maloofs will apply on May 2.

    Maybe Taylor-ICON comes back looking good on May 20. There is a chance of that. They BOG won’t vote on May 2, and the Maloofs can rescind the app.

    But they’re going to apply.

  8. Mike;

    The Maloofs are desperate for a deal, any deal, with Samueli and, by extension, Anaheim. The NBA is not.

    Moving a third franchise into SoCal doesn’t help the NBA nearly as much (or possibly at all, given the nature of the proposed deal) as it does the Maloofs. My belief is that the league would approve a move out of Sacramento (because of the alleged arena issue, and the city’s unwillingness to heap hundreds of millions in largesse on to a failing franchise), but would like a more favourable destination – one that actually does something for the league.

    The Maloofs options are few at present. They don’t even have the luxury of time. The NBA has nothing but time… they may even own the franchise themselves within a year or two.

    The Maloofs will apply to relocate. But I won’t be surprised if the league either refuses or says “we’ll get back to you on that”. There are other possible locations for a portable team that would benefit the league as a whole a great deal more than Anaheim would.

  9. Mike you’re ignoring what the Maloofs really need. Money. They don’t need Samueli. They just need money. And despite their stupidity and lack of dilligence it turns out there is actually money in Sac. CSN is offering them more money for the TV rights as of yesterday, Burkle is offering them money to buy the team, the city has found 10 million in corporate box purchases they were too lazy to locate… Fact is there is money for them in Sac. They just weren’t looking.

    As for Q and R, the Maloofs going on TV and showing off your $6,000 Carl’s Jr combo meal a couple of weeks before an election where you’re claiming you need public money for an arena killed that deal…

  10. Dan, we know absolutely nothing about the Burkle offer. If it was $100M less than Samueli’s, the BOG probably approves the move with more than 20 votes in favor.

    The league does not want to own 2 teams. No question about it, they allow the move before they take the team over.

    And Burkle is now far more interested in the Dodgers than the Kings. As a Giants fan, this confuses me. Dodgers? Blech. (Just kidding, they’re obviously one of the biggest franchises in the world.)

    It bears repeating: The league will allow the team to move to Anaheim well before it takes the team over, and they cannot force the Maloofs to take a substantially smaller offer than Samueli has made.

    These points should be obvious.

  11. Mike, I don’t get it: Why do you think the only two options are for the NBA to okay the move or to take over the team? What do you think would happen in John’s “we’ll get back to you on that” scenario? That the Maloofs would declare bankruptcy?

  12. Mike you keep referring to Samueli’s “offer”. Samueli isn’t offering to buy the team. He’s only offering $ to facilitate a move (money the Maloofs don’t get to keep but have to spend to move the team and then pay him back). So I’m not sure why you keep comparing the two. The Maloofs don’t stand to make any money directly from Samueli and in the end the only thing they give him is rights to the team should they default on paying back the loan.

    As for your contention Burkle is more interested in the Dodgers, you base that on? Link? The Dodgers won’t even be available for sale for a very long time based on what’s going to happen with the McCourts. The Kings on the other hand if forced to stay in Sac, may be available quite soon since the Maloofs as you say are desperate for cash.

  13. Just a question re: TV money. Is this the local TV money we’re talking about here or the ABC/ESPN national TV money. If it’s the ABC/ESPN money, something interesting to think about:

    This comes up every so often, but there’s a couple of New York brothers, Ozzie and Dan Silna, who were the owners of the ABA’s Spirits of St. Louis the last two seasons before the ABA-NBA merger. To fold their team (which was heading to Utah before the merger), the Silnas struck a deal in which they get ONE-SEVENTH of the national TV money – FOREVER!

    Would that have anything to do with the Maloofs by chance?

  14. The Silnas don’t get 1/7 of the entire NBA TV money, they get 1/7 of the share belonging to the four ABA teams that moved to the NBA (Nets, Spurs, Pacers, Nuggets). So basically a little over half the share of one regular NBA team.

    This is nothing to do with the Maloofs, in any case.

  15. No it’s local TV money with the local network. Right now the deal the Kings have in Sac is worth 11 million with CSN California, they’d reportedly get 20 from a Samueli owned affiliate in Anaheim (not the 25 or so with Fox Sports Net as was originally assumed). However CSNCA is now revisiting their contract and putting more money in the pot (possibly up to matching the 20 million offered in Anaheim according to some sources). So in the end the TV deal may actually be a break even line item for the Maloofs.

    That’s why in the end this move will fail. It makes no financial sense for the Maloofs in addition to the other roadblocks now in place such as the removal of the $75 million in funding for Honda Ctr upgrades. They’d have to pay back the $77 mil they owe Sac, they’d have to pay back the $50 mil or more Samueli loans them to facilitate the move including paying off the Lakers, Clippers and league (or risk losing the team to him and that assumes the Lakers don’t price the Kings out anyway), and they city of Anaheim would have to use Honda Center funds to pay back the bonds to Samueli assuming that said bonds even pass the now required public vote. And all of this to move into a market where the Kings would be the third man on the totem pole sharing a market with the NBA’s largest team in an arena that’s already approaching 20 years old (which as we know in arena years is closer to end of life than the start…

  16. First of all the Honda Center has been face lifted a few times over the years and is still quite modern.

    The Palace at Auburn Hills was built in 1988 and is still considered very modern because of the luxury suits and club seating for example.

    Power Balance Pavilion is a relic and is so far below NBA standards that it is unreal.

    No one can force the Maloofs to sell or stay in Sacramento if they do not want to. Donald Sterling years ago moved to LA and won an Anti-Trust lawsuit against the NBA even though the owners shot his move down 22-0.

    22-0! Yet the Clippers are playing LA as we speak. The owner vote is a mere formality and the league just wants to make sure all the facts are presented to the Maloofs before they make their final decision.

    The 75M in Anaheim Bonds in merely a financing conduit that can be worked around very quickly…Much quicker than you think.

    Sacramento is a poor NBA market period. It does not matter if they have 497 straight sellouts as that does not mean anything in the new world of NBA economics where luxury suites and club seats are what make teams money. Not fans in the nosebleeds.

    7M from local corporations? That is peanuts to the bigger problem that the current Arena only has 30 luxury suites and zero club seats. While the Honda Center has 84 much nicer suites and 2K in club seats…do the math guys.

    CSN is desperate for the Kings to stay and are willing to pay $$ because they will have to shell out a ton of money to the Warriors instead in a new TV deal encompassing all of Nor Cal that would cost them far more.

    The Kings are long gone guys and there is nothing anyone can do to stop it. The Maloofs do not want to sell and they need a new arena now not in 5 years like Sacramento is talking about. They cannot survive 5 more years in the current Arena regardless of what anyone says.

    The Maloofs should be commended for staying such a crappy arena for so long. They tried so hard to get something done and most owners would have moved or sold the team days ago. They are actually better than most owners in the league in this respect.

    This deal is done and when May 2nd comes you will all be stunned when the owner vote goes 24-6 or something of the nature.

    No team has ever been turned down by the owners for relocation except the Clippers in the 1980s to LA….We all know how that ended up.

  17. Actually either the Bucks or Timberwolves were turned down for relocation about a decade ago. But don’t let facts get in the way ;)

    And your number if off, it’s now 10 mil in corporate money, and that’s the city taking the lead for a team that’s not committed to staying so far…

    As for the Maloofs “trying hard”, don’t make me laugh. If they’d tried hard they wouldn’t have done stuff to sabotage their own “efforts” like going on TV and flouting how rich they were in the mid decade while simultaneously begging the public for a handout. Carl’s Jr anyone?

  18. The moment I read the ludicrous statement that, “First of all the Honda Center has been face lifted a few times over the years and is still quite modern,” I said to myself, “this must be Sid”. The Honda Center may be OK as an NHL facility, but it is subpar as an NBA facility (just like the Palace, which has the same single concourse problem as the PB Pavilion) due to bad basketball sight lines, limited lower bowl seating and a lack of sideline luxury boxes.

    Also, this ain’t 1982. It is true that it would be difficult for the NBA to keep a team from moving and it is true that the Maloofs could go to court to challenge a relocation fee that they perceive to be exorbitant, but if the family is low on capital (which, by all reports, they are), I have a hard time imagining them trying to bully the Kings into Anaheim for the 2011-2012 season.

    Neil is right here. They will punt for another year. What probably happened was that the Maloofs looked at the TV landscape and demand for NBA product in southern california and saw that as a solution to their money problems. What they didn’t anticipate is Samueli and the other NBA owners looking at the same thing. Samueli saw this as a way to leverage the location of the arena he manages into an attempt to make KDOC into a more valuable station by owning the rights to NBA broadcasts in the hottest NBA market, and the other owners see that the Maloofs don’t deserve an instant nine-digit uptick in franchise value without having to pay a commensurate relocation fee.

    The real interesting thing will be what happens in Sacto. That city does need a new arena. Activists can moan about corporate welfare all they want, but our fine capital is not so great a city that touring sports and entertainment acts are forced to visit. I’m not saying that they should give an arena to the Kings, but if you want to have a higher quality of life in your city, you have to have at least an acceptable arena for sports and entertainment events.

  19. Neil, maybe that’s the piece of information you’re not considering: The state of the Maloof financial world.

    Here’s a read for you:

    They’ve had at least 2 covenant breaches at the Palms. Just look at the balance sheet in the documents. This is all based on Bloomberg news stories.

    The Maloofs probably have a negative net worth at this time.

  20. Dan,

    I believe that it was the Timberwolves who almost moved to New Orleans in the 1990s if that is what you were referring to.

    If you were referring to something else, please feel free to correct me.

  21. The Kings will only have a 1-year deal with KDOC-TV and I possibly believe they’ll be getting a 1-year deal with AM 830 KLAA until next year when they can be put on FOX Sports West once the Lakers leave and get a new radio deal with a local station like AM 570 KLAC, AM 790 KABC or AM 980 KFWB as most people think that the Clippers are going to renegotiate their TV contract (may move their road games to KCAL 9 or My13 KCOP in Los Angeles while having home games on Prime Ticket). That will also give the Maloofs leverage to get put on other channels as well.

  22. You know, though, Ben, that Samueli is a very motivated buyer. He’s been trying to get an NBA team for a decade now. He’s very close to pulling it off.

    He’s a billionaire. If he has to say, “D’oh, you drive a hard bargain! Here’s another $10M!” to get the team — he will.

    This deal is far closer to being done than people think. Now, they may rescind later, but on May 2, I’d say the smart money is on the Maloofs applying to move the team, even if it’s simply CYA.

  23. Looks like the relocation committee has made their decision. They’re going to recommend Sacramento for 2011-12.,0,7538878.story

  24. MikeM,

    I am sure you are correct that Samueli wants to buy, but I’m site it makes little difference because the Maloofs won’t sell. No matter how broke the Maloofs are, they treasure being NBA owners and unless you get a major scandal racism w/ Schott, violence w/ McCourt, etc).

  25. Neil & Others,

    I’m a sociology professor at Sac State, a diehard Sacramento Kings fan (yeah, it’s painful, even aside from the possible move), and a progressive community activist. Like many Sacramentans I wore purple on Thursday to show the NBA our support for the team and I’m thrilled that Mayor KJ seems to have bought us a year to put together and arena deal to keep the Kings. On the other hand, I’ve spent the last few days reading everything I can on stadium financing (just ordered your book and can’t wait to read it!) and the process looks pretty scary. I had bought into many of the arguments about how arenas pay for themselves over time, spur economic development, create jobs, generate tax revenues, etc. I’m now learning from your work and others that the issue is far more complex and that perhaps the question isn’t how much our community will benefit from a new arena but how badly we’ll get fleeced. For sentimental reasons I still want to keep the Kings and our downtown area does cry out for the kind of revitalization that an arena project may bring. Based on your research, what are some of the key demands that grassroots progressives, Kings fans, and local taxpayers should be making during the upcoming arena negotiations? Assuming we’re probably going to get fleeced by the Maloofs and the NBA to some extent, how can we minimize the fleecing? Much thanks for any insights you can share.

  26. A short list of things to demand:

    1) TRANSPARENCY: Make sure all the public costs are known up front, before the deal is voted on. This means not only taxpayer contributions to construction, but any free land, tax breaks, or concessions in the arena lease itself, which is where teams increasingly like to hide subsidies (by, say, demanding that cities pay for operations and maintenance costs).

    2) REDUCE PUBLIC RISK: The public shouldn’t be on the hook for any cost overruns, and teams should be forced to pay rent even if they have a shortfall in revenue.

    3) PUBLIC CONTROL: If the taxpayers own the building, they should get to say how it’s used on non-basketball days, and reap any revenues from that.

    4) EQUITY: If the city is putting up half the cost, it should get half of the subsequent revenues.

    The problem here is that the team will, rightly, point out that some of these demands will defeat the purpose of building the arena in the first place – if you have a building that, say, is going to cost $400 million and generate only $20 million a year in new revenues, there’s no way to slice that cake that leaves both the team and the city coming out ahead. In most cases, teams aren’t looking for new buildings (which in and of themselves generally lose money) so much as new subsidies – so trying to craft an arena deal that doesn’t sock it to the city too much is going to be hard, since the whole point of the arena is to extract public funds and put it in the owners’ pockets.

  27. Too funny, what happened to all those experts that were so convinced their facts were the only ones revelant, which lead to there being no question that the kings would be filing for relocation May 2?

    Hahaha…. so much for your elephants in the room.

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