No Sacramento buyers yet for Kings, as Stern says it’s “not a bidding war”

Sometimes I love the interwebs. This article in the Sacramento Business Journal on attempts by Sacramento Mayor Kevin Johnson to assemble investors to buy the Kings bears the optimistic-sounding headline “Investors would decide on Kings arena site,” but if you look at the URL, you can see what was presumably the original headline: “sac-kings-investors-arena-no-news.” Mr. Michelle Rhee still says he wants to have a bid ready to go before the March 1 deadline for teams to apply to the NBA for relocation, though given that prospective Kings owner Chris Hansen has already applied to move the team, it’s not clear what the hurry is. (No vote will be taken on the sale or move until the owners’ meetings in April.)

Meanwhile, NBA commissioner David Stern had this interesting tidbit to say about how the NBA will make its decision:

“I don’t think it’s a bidding war,” Stern said. “There’s a series of issues that are defined by our constitution that have to be considered. One of the things that our board is mandated to consider is the support for the team in the prior city. So there are real issues for the board to consider, about the buildings, about the likelihood they will be built, about the support from the cities.”

That sure reads to me like “I don’t care so much about your ‘whales,’ just show me you’re ready to pay for a new arena and actually know where the money is coming from.” This could well turn into a bidding war not among prospective buyers, but among city councils.


22 comments on “No Sacramento buyers yet for Kings, as Stern says it’s “not a bidding war”

  1. One reason I think you’re seeing an urgency from Sacramento is the fact that while the NBA is saying they’ll wait for April to vote, if they don’t see progress from Sacramento, and a plan in their hands sooner rather than later then the Board of Governors could technically vote sooner. And word is that’s exactly what Hansen is pushing for. The BOG can technically vote on both issues (sale and relocation) via conference call combined with emails at any time. If the league doesn’t see an effort coming to fruition for Sac by KJ’s self imposed March 1 deadline the fear is the Board will just go ahead and finish undercutting Sacramento as has been done during this entire process.

  2. Neil, I think you’re onto something in regards to city councils. Mr. Michelle Rhee wants to go to New York in April with not only a competing group but with city council approval of public dollars towards the project. I wonder what the council would approve- a non-binding commitment of public dollars or would they start soliciting bids to mortgage parking assets. The group that the Mayor is working with hasn’t decided on a site for the new arena but it seems that the momentum is going towards the Downtown Plaza mall. Unlike the railyards, the area is developed but arena construction could cause severe bottlenecks on some main traffic arteries in tow. On top of that, the Downtown Plaza site is not very large but the new owner of the mall thinks it could happen- they commissioned their own feasibility study.

  3. It has always been a bidding war among prospective buyers and city councils – it is a package deal. You get town A and its value to support an NBA franchise $$$ and $200m cash, plus private equity of $800m vs. town B and its value to support an NBA franchise $$ and $150m cash, plus private equity of $700m. Then you simply ask each group (package) how much more they will pay till you reach the best deal for the NBA. “Support for the team” equals revenue or money to pay back the equity owners and increase the value of an NBA franchise, over time. Best

  4. Sure, but I think Stern’s comments were more targeted than that. Unless I’m mistaken, he’s sending a message to KJ: “I don’t care who your damn owners are if you don’t have an arena deal in place.”

  5. KJ, err, correction, Mr Rhee did this to himself when he imposed that March 1 deadline. Burkle (if he’s even really interested; I think he’d have made an offer by about 18 months ago if he had been) is interested in the downtown plaza location. But if they do that, it wipes out about 50% of one of the lots the City was hoping to lease out — and it’s a huge lot.

    And if they do that, it obliterates the agreement they put together last February. That agreement was already fragile enough.

    For KJ to get this done, as Stern said, there will be a “substantial subsidy.” How do you put together that deal within the next 21 days?

    A few weeks ago, a friend of mine (and council member, as it turns out) suggested that the City should sell bonds to raise their portion instead of leasing out the parking. I think that’s their one and only shot, but they better start debating this, oh, about a month ago. Three weeks, they ain’t gonna get it done.

    That addresses Stern’s comment about “likelihood”. In my mind, I translate that to “Wow, Sacramento, you are basically out of time.” The BoG will look at where we are and conclude, “Well, maybe they have the money in about a year, and maybe they don’t. Hard to tell”, right before voting accordingly.

    Stern’s right, there will be no bidding war. Actually, there will be no MORE bidding. The negotiations, as I understand it, ended somewhere right around the VB announcement. I’m pretty sure we now know why VB backed out now.

  6. Sell bonds and pay it back with what? “Sell bonds” isn’t a funding scheme, it’s just a way of spreading your costs out over time.

  7. I’ll send you a link to the original KCRA item.

    Prepare for moderation.

    (It’s on page 2 of the link I’m about to post.)

  8. http://www.kcra.com/news/local-news/news-sacramento/Sacramento-dusts-off-arena-funding-plan/-/12969376/18157884/-/item/0/-/s8u20oz/-/index.html

  9. So instead of selling off the future parking revenues to a private investor, you keep the revenues and use them to pay off bonds. That’s fine and dandy, but still doesn’t answer how you fill the $9 million a year hole suddenly left by the disappearance of your parking revenues.

  10. Oh, I know that.

    Jay: “We’ll use that $9M to pay off the bonds!”

    Taxpayer: “Um, you already spend that money.”

    Jay: “Well, think of all the money that arena will make. Oooh, look: Squirrel!”

  11. Realistically, though, how DOES KJ assemble a plan in the next 21 days?

    I like another thing Jay says: Since there are two new Council members, yeah, in the interests of transparency, they really do have to re-debate this. Even if they don’t change one word from last February’s proposal.

  12. Wouldn’t the City Council have to redebate the issue because it may involve a different site and there are different business partners in the mix? But I think this council is more friendly to KJ. One of KJ’s biggest antagonists on the council left, only to be replaced by a close friend of Mr. Rhee.

  13. I already reported, the Sperm Whales are in place. I try to use Mafia terms to show how superior I am. Remember, I ‘m from NY – I’m better than you.

    I already reprorted this is a done deal. The Purple Kings are staying Via Sperm Whales and Vito.

  14. Jason, one Council member thinks they’d need to re-debate the issue. His theory is that new Council members = new Council. But, sure, a lot of work will need to be redone. I do think, though, that KJ will just shuffle out one set of numbers, shuffle in a new set, and call it good. The new debate will go a lot faster than the first one did.

    In June or so, they voted to formally suspend the parking lease-out. That could easily be a hitch. Do they have to start all over with the the process? Well, if the arena goes at 7th and K, yes, because that location reduces the number of parking spots they’d be bidding for. If they started that again, it’d be a year before they saw a check, and that check may not be large enough.

    That’s probably going to be the catch for the BOG. Right now, it just looks like Seattle is way farther along in the process of planning an arena. That’s the part of Stern’s comments Sac fans should take no comfort from.

  15. It sounds like Downtown Plaza is the direction that Mayor KJ and his anonymous whales are going in. The Sacramento Bee is talking that one up: http://www.sacbee.com/2013/02/08/5174535/back-seat-driver-railyard-vs-downtown.html.

  16. Jason, that catches them between a rock and a hard place. The timing on that is now impossible. There’s no discussion on the Council’s calendar regarding that approach.

  17. MikeM, I’m sure that the City Manager will find a way to cram this thing on a future council agenda or the council could call a special session. #HereWeCallSpecialSessions #5Votes #DowntownPlazaArena

  18. Oh, couldn’t Sacramento issue bonds based upon future arena revenue? That is the scam going down in Seattle. Sacramento could do the same. Both Seattle and Sacramento governments are wishing to steal from the Citizens to hand wealth to already wealthy individuals. Sacramento could be just as dishonest as the Seattle politicians. Why not? Seattle has an initiative process, Sacramento should finance an initiative in Seattle to stop the Seattle arena proposal. It would not cost much money, and requires about 21,000 (twenty one thousand) signatures to get on the ballot. That would be easy and would cost no more than 50,000 dollars to get the required signatures. Seattle citizens do not want to publicly fund the arena in Seattle. The signatures would be easy to get. I would do it myself, but do not have the money; and I would not be able to get all 21,000 signatures myself. If I could I would. Something to look into would be the Seattle Initiative, referendum, and charter amendment process.

  19. They *could*. But then that’d mean less money for the team owners/arena operators, so I doubt they’d go for it. Though it would certainly set up an interesting decision for the NBA: Would they rather have a new arena funded 80% by private arena revenues in Seattle, or a new arena funded by somewhat less than that in private money in Sacramento?

  20. I have already stated the Kings are staying. I’m always right and a know it all. Stop talking about the move. It won’t happen. Sacramento is the greatest sports town in America. Nobody comes close.

  21. The NBA is winning regardless of what happens. SuperSonics fans, beaten down and slighted, are doing to Sacramento what Oklahoma did to Seattle. It’s a mean circle of ignorance. And the NBA laughs all the way to the bank through crocodile tears. The sports industry plays fans for the chumps that they are.

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