Stern tells Sacramento bidders for Kings: Sweeten the pot

The Burkle/Mastrov bid for the Sacramento Kings is barely a week old, and already NBA commissioner David Stern is saying it’s not good enough. Stern spoke at length about the bid at Friday’s Warriors-Rockets game, and made clear that the group that wants to buy the Kings and keep them in Sacramento will need to up their bid if they want to have a shot at landing the team:

Stern said the Sacramento group’s offer has some “very strong financial people behind it but it is not quite there in terms of a comparison to the Seattle bid.” He added that “unless it increases, it doesn’t get to the state of consideration.”…

“I think right now it is fair to say that the offers are not comparable,” Stern said…

The details of the Sacramento group’s offer haven’t been made public, so there’s no way of knowing whether they just tried to lowball their bid in hopes that Stern would give the benefit of the doubt to a group wanting to keep a team in its current city, or if it was close to the Seattle group’s bid, but no cigar. Either way, though, they are now free to raise their bid: Stern said the NBA will hold a preliminary meeting on April 3 to discuss the Kings situation, with a vote to take place at the owners’ meetings on April 18. And in case anyone thinks the NBA isn’t trying to get a bidding war going here, Stern made that eminently clear as well:

“There’s a substantial variance,” Stern said. “I have an expectation, a hope, that the variance will be eliminated by the time the owners give it consideration.”…

“If an ownership group has decided to exit our league,” Stern said, “it doesn’t retain the ultimate right to tell us where it’s going to be located.”

One big question now: If Burkle and Mastrov have to offer more to the NBA in order to land the Kings, will they turn around and increase their demands in the arena lease talks now ongoing with Sacramento? This has been the holdup with keeping the Kings in Sacramento all along: Everybody interested in owning the team is demanding a massively subsidized arena deal, and Sacramento hasn’t been able to find the cash to subsidize one massively enough. Burkle and Mastrov have now been given more time, and an outright invitation, to match or surpass the Seattle bid; whether they do so, and whether the NBA approves them, could hinge on whether there’s enough money to be made in a Sacramento deal to make that worth everyone’s while.

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42 comments on “Stern tells Sacramento bidders for Kings: Sweeten the pot

  1. A few weeks ago, the word on the street seemed to be that the talks between the City of Sacramento and the “unidentified whales” didn’t go very well. And all of a sudden, Mayor KJ took off his jacket and gave a speech so everything changed. But if the talks were challenging a few weeks ago and that the Burklestrov bid was substandard to start with, can they really overcome all of this in the next 10 calendar days (the “term sheet” is schedule to be made public on 3/21).

  2. Well, it’s not rocket science: Burkle and Mastrov just need to come up with more money to placate the NBA, and Sacramento just needs to come up with more money to make Burkle and Mastrov (and the NBA) happy. I don’t think that’s necessarily any harder to do in ten days than it is in ten months.

    The bright side for the Sacramento bidders here is that Stern has telegraphed that if they come up with enough money, they’ll be considered. I was mildly surprised he didn’t say anything about Sacramento’s smoke-and-mirrors arena financing plan, but maybe he figures either he’ll cross that bridge if and when Burkle/Mastrov make a competitive offer, or that if the arena plan is good enough for them, it’s good enough for the NBA.

    Either way, I’m sticking with my assessment from the beginning of the month: Seattle is still the front-runner, but by no means a lock.

  3. smoke and mirror financing is very apt…

    basically there is no downtown in Sacramento…”no there there”…so all this parking money hype is nonsense…why park downtown? Government buildings? No downtown retail scene as in Chicago or Portland or SF or or or or or….

    no money in Sacramento for this kind of a deal…

    Sacramento does have better weather than Seattle and more outdoor things to do more times of the year…but as far as a City goes…forget it…

    All this stuff is readily available in the Bay Area just an hour or more away…

  4. Sacramento could say “Screw it, we’re going to raid our general fund to give the Kings whatever they want.” (Lord knows other cities have.) Which is effectively what they’d be doing if they sold future parking rights and didn’t have any way to replace them.

    That’s pretty much the scenario I see for Sacramento to keep the team, actually: Burkle and Mastrov increase their bid, and the city sells parking rights and agrees to backstop any missing money (whether replacing the future parking fees or filling any shortfall in money raised by the parking fees) with general fund dollars. Previous to now it hasn’t sounded like the council would go that far, but staring down the barrel of a relocation … hard to say.

  5. Yeah, I think KJ is going to panic and put in loan forgiveness on the current debt to make a deal work. That will get the NBA’s attention.

    But I still think the NBA is just giving us the courtesy. Am I the only person on the planet who has been told, “Sure, we’ll think about it.”, when in reality they’re already done thinking about it? I think it’s called “Being blown off”?

    The Maloofs don’t have to accept any offer, by the way. The Hansen offer is in first place; that’s the only deal the Maloofs have right now. The Mastrov offer is widely considered to be nothing more than a backup offer. The Maloofs don’t have to accept it.

    That’s all Mastrov is hoping for; somehow the BOG rejects the Hansen offer, and he’s ready with money in case that happens. If that doesn’t happen, nothing ventured, nothing gained.

  6. Sure, but then the Maloofs would have to choose between keeping the team themselves in Sacramento and selling it to Burkle and Mastrov. Knowing that the NBA has effectively said, “If you want to sell the team, you have to sell it to these local guys.”

  7. What’s hard to do in ten days is a non “smoke and mirrors” arena deal that involes another site and a different party of potential owners. MikeM is right. I could see KJ putting loan forgiveness on the table. David Stern wants a little more desperation from Sacramento and KJ, and sadly, the City Council, will comply.

  8. Unless the Hansen contract has escalation clauses.

    Really, though, that’s what the rumored $75M relocation fee is about; it’s almost like a conditional approval — a way of saying, “We don’t like what you’re doing, but if you’re willing to pay this massive relocation fee, I guess we’ll accept it.”

    Think of it as being a speeding ticket. “Whoa, Nellie, that’s gonna cost you!”.

    To which Hansen-Ballmer-Nordstrom replies, “Cash, check or money order?”.

    It is going to take a very, very, very long time for the NBA to make $75M off the Kings in Sacramento.

  9. Elk Grove, our neighbor to the south, wants some futbol too.

  10. The pickle Mastrov is in is that his bid, should he formally put one forward (remember Stern was pretty candid in saying Friday that in it’s current form it was more of an ‘intention to bid’), isn’t really a bid. It’s more like another decent option to consider if the NBA does not ratify the Hansen offer.

    Right now, the SAC folks can only hope to have the Hansen offer rejected by the league. If that happens, then the Maloofs are back to square one and they can sell to whomever they please, pending NBA approval.

    The other aspect of the pickle Mastrov is in is that he can die trying to match the Hansen offer now or pick up the team for a much smaller amount should the Maloof’s want to sell to whoever they can once/if the Hansen bid is rejected by the league. That’s both a pretty delicate balancing act and an awfully expensive one too.

    Fewer people bidding on an entity means, a small sale price which would be good news for Mastrov but bad news for the Maloof’s.

  11. Neil:

    The truly great thing for the NBA is that they know they have a committed owner-to-be in Seattle. So if by some miracle Sacramento decides basketball is more important than schools, hospitals, parks, policing and all other public facilities/services, the league can still count on Hansen staying in the game.

    Stern knows well that you always remain silent when someone is putting money in your hand and asks you to say “whoa” when it’s enough.

    Anyone think the mythical ‘deadline’ won’t just go away if the Sac Whales come up with a bid good enough for consideration? Anyone think the Hansen group won’t be given an ‘opportunity’ to sweeten the pot?

    Think Batmobile…

  12. I’m torn on that April 18 deadline myself, John.

    On one hand, the BOG wants to stop futzing with this.

    On the other hand, if Sac is one week away from some important report that would either oust them from the game or keep them in forever, maybe they say, “What’s one more week?”.

  13. As a Seattle supporter, I hate to see Hansen’s loyalty get taken advantage of. I have seen others from SAC such as Carmichael Dave say that NBA should pass on Hansen simply because he wants a team so bad that he’ll just keep trying again. Whereas the NBA would never go back to SAC. And hence, advantage SAC.

    I think that Hansen and Ballmer should draw the line and tell NBA that this is a one-time deal. If the league doesn’t approve a deal that two willing parties have signed, then why keep banging your head against the wall. I would like to remind you that the City council has given Hansen 5 years to find a team, not forever. Also, if the mayor loses re-election to an anti-arena guy, who is to say that the new guy wouldn’t do everything he can to blow the arena deal up? Hansen should make clear that politically and financially, it is now or never. And if the NBA owners are still stupid enough to pick the SAC market over Seattle, then so be it.

  14. If the Kings leave, hopefully Carmichael Dave will go away too but he’s broadcasting out of his garage so it’s not like he’ll lose anymore economically. Maybe he could comment on high school sports from his garage. Carmichael Dave doesn’t even live in the City of Sacramento but he’s happy to drive in from the suburbs to take money away from us to subsidize his entertainment. The pro-arena punditry here in Sacramento is cautiously optimistic and sees everything with rose, er purple rose, colored glasses. The NBA BOG will decide based on the combination of city and ownership that will make them the most money. Right now, that looks like Seattle but if the Sacramento owners bid more and if the City produces a realistic arena plan, the team stays. I predict that Seattle will win- higher bid, stronger ownership group, further along on arena planning, and likely, more lucrative TV and sponsorship deals. I also predict that Sacramento will get an “Atta Boy” and be a front-runner for an expansion team.

  15. Despite Mastrov’s bid for the Kings I think people are forgetting the NBA BOG will be exclusively vetting the Hansen/Ballmer/Nordstrom ability to be viable, financially-stable owners of an NBA franchise. So far, no reason(s) have been identified to deny how over-qualified they are to be owners. Sac’s counteroffer is entirely IRRELEVANT to the signed, binding agreement between the Maloof’s and the Seattle group already sitting on the owners’ desk. I suppose if the BOG could actually find a legitimate reason to deny the Seattle deal, they could then analyze Mastrov’s counteroffer. But, until then, they can only seriously consider and vote on Hansen’s deal. Am I wrong?

  16. Yeah, I think you’re wrong. The NBA will be ruling solely on one basis: “Is it better for us, the other 29 league owners, to okay the sale to the Hansen group, or reject it?” Which means it’s essentially a bidding war, though with a lot of complicating factors (like whether you’d rather choose Seattle to keep the move threat saber sharp, or choose Sacramento to encourage cities to think they’ll be rewarded for throwing money at new arena deals).

  17. If the BOG decides to stick with Sacramento, there is an excellent chance their arena deal would implode 12 months after the Council votes on it. It could implode over the EIR (the freeway access there is TERRIBLE!!), low bids for the parking, excessive demolition costs, or some other factor.

    Can you imagine the NBA’s reaction if the NBA says, “Okay, Mastrov it is!”, and then Sac cannot deliver on an arena plan? The Maloofs would sue; Hansen would sue; KJ would have to quit in disgrace (and take Michelle with him, so I guess there’s an upside to this)… And then Mastrov would take the Kings to San Jose, definitely with the NBA’s blessings.

  18. Jeff S/Neil—–I believe you’re both correct. Let me explain how I believe I can pull this off :)

    I believe that the essence of what the BOG will be deciding is: If/when it comes time for me to sell my own NBA team one day, can I sell to whomever I please? (rough translation: highest bidder).

    So while I agree with Neil on his question (‘Is it better for us to ratify the Hansen deal or to reject it?’) I differ with respect to how the NBA BOG will interpret that question.

    I believe the BOG will answer the question by saying the Kings are moving to Seattle because that is in the best interests of the respective NBA owners (freedom to sell to the highest bidder as long as the bidder has the financial wherewithal to cut the check etc).

    Please note, this is not what the BOG will say publicly. Not at all. Publicly, they’ll say something like: ‘this was a gut-wrenching decision’ and that ‘it was difficult and ultimately sad that one city had to lose etc but that in this case, Seattle has won out, etc…’

    Although as Stern hinted at Friday night in Oakland, if the current SAC offer doesn’t significantly improve in short order, then this debate is all for not and the team will be heading to Seattle in short order.

  19. That’s not the only basis for their decision, though. NBA owners also have an interest in, for one thing, where other teams play, as witness the league’s effective rejection of the Kings’ move to Anaheim a couple of years back.

    I don’t expect this to be a one-sided decision, unless the Sacramento plan completely blows up before April. Sports team owners almost never agree on anything — except “let’s screw the players in the next collective bargaining agreement” — and I expect that you’ll have lots of people taking positions based on their interpretation of what’s in their own petty self-interest this time as well.

  20. Having said that, though, Neil, when I read the Bee article today that says Sacramento has more allure than Seattle, even I kind of laugh.

    Don’t get me wrong, Sac isn’t a bad place to live (regardless of Sergio’s opinion), but that said, Seattle really is more glamorous. I don’t think you’ll find a lot of disagreement there.

    Hey, we can’t all be NYC. Nothing wrong with that.

    The only real reason I point this out is, you know, Sacramento vs Seattle. What’s next — Bakersfield vs San Francisco? Sorry, but Seattle is considered the nicer town.

  21. To underestimate the undeniable pettiness of NBA owners is a fool’s errand. Thanks for the reminder, Neil—well said.

  22. Neil, I understand your point on how the owners are ultimately, as people and businessmen, driven by which proposal is the most lucrative, however, my question was more concerned with the removal of the owners’ financial bias. It is their duty to identify a valid reason(s) to deny the sale from one willing owner (the Maloofs) to a group that is overly-qualified to own an NBA team (Hansen/Ballmer/Nordstrom). I don’t think the emergence of Group B (Mastrov) is a valid reason contained within the NBA’s bylaws or constitution to negate the signed, binding agreement with Group A (Hansen/Ballmer/Nordstrom) merely because they may be against relocating the team from Sac to Seattle.

    Removing all financial bias, how can the BOG deny the sale to the Seattle group if said group meets all the prerequisites to own an NBA team? I think too many people are caught up in the relocation request and forget the BOG will be having two separate votes: one for the sale, and one for the relocation. If the Hansen group is qualifed to own an NBA team, they should be allowed to. If any owner prefers to keep the Kings in Sac, then he can cast his second vote against relocation.

  23. Mayor KJ would be a good commish. Not likely to happen. A commish that cares more about the game than the dough, and would really try to help the franchises that are struggling.

  24. I completely agree with Jeff. The BOG’s job here is not to look for a qualified competitor; its task is limited to determining whether or not the Hansen-Ballmer-Nordstrom offer is acceptable. If it’s acceptable to the Maloofs, then what some second or third or fourth party is yelling out in the background is just flat-out not relevant.

    You ignore the “allure”-argument entirely at that point.

  25. I love that you guys are using “task” and “duty” when it comes to NBA owners. If they decide instead to base their decision on whether Chris Hansen or Ron Burkle can make a better risotto, who exactly is going to tell them they can’t?

  26. Stern as alluded to this being one decision by “getting the committees together”. The two committees are the Relo and whatever other committee approves the sale. I just feel that the NBA needs to make it look like it gave Sacramento a shot at keeping the team & that all of Hansen’s cards have been played with the NBA blessing every move. I am certainly not guaranteeing anything or even willing to bet on the subject.

    I was reading through the comments thinking, maybe the league approves the Relocation to send a message to other cities facing an Arena standoff to make sure they don’t wait to the last minute to get their Arena plan together. Then I thought…hmmm…they did have a deal last year.

  27. DA on summed up my point rather well in this paragraph of an article he just wrote:

    “But Stern is also making it clear that while owners could approve a sale to Hansen if it’s a better deal for the Maloofs, it is not tying that sale to a yes vote on relocation. They are separate issues. What Hansen would do in such a scenario, in which he is approved to buy the Kings but not allowed to move them out of Sacramento, is unclear.”

    They are separate issues. Yes, Neil, as I acknowledged in my earlier post, businessmen will ultimately make decisions based on what’s more lucrative for them and their interests…HOWEVER…if they were to make a decision on the SALE of the Kings to Hansen/Ballmer/Nordstrom, it SHOULD be overwhelmingly in favor since they are overly-qualified to own the team. Now, as DA said, the relocation is an entirely separate issue and vote. If an owner thinks the Kings are better off in Sac (lol), he can vote against relocation AFTER he votes to approve the sale. Get it?

  28. The most amusing outcome to me would be to approve the sale, but reject the relocation.

    I think we’re just being realistic, Neil. That deal last year was probably in trouble, too. I’m operating from my best recollections here, but I seem to remember the parking had 3 components to it: Lots, on-street and enforcement. But in CA law, you can’t sell off meters that fund safety programs; you have to retain possession of them. Part of the valuation of the meters was, “Well, we can get them to change that state law.” That just seemed like a complete fantasy to me.

    Second, when they leased out the lots, they’d have to pay off existing bonds. This was going to further decrease the amount the bid would gross.

    Add it all up, and they were never going to gross $255M for enforcement and the lots. Maybe they would net $180M, but that was about it.

    So yeah, even last year’s deal was pretty iffy.

    There’s not a thing wrong with assembling a backup bid, in case the primary bid has issues. But that’s all it is; a bid the Maloofs can contemplate for 20 seconds, then reject. If the BOG rejects it, they’ll tell the world what was wrong with the bid, then Hansen and Maloof lawyers will get together to resolve those issues.

  29. I went to the game on Friday. What we should all be mad about is that STA is a good arena. Great freeway access, great parking (that seriously needs maintenance), great seating, very central location.

    It needs about $50M in maintenance. For sure. Those bathrooms are hazardous, for Pete’s sake. So… Yeah, let’s bug the taxpayers for $255M.

    I mean, I’ve always burned down houses when the water heater starts to leak. Doesn’t everyone?

  30. Just trying to keep a few butts in the seats. It’s working. There’s even a fan or two that posts on this site, that are going down with the ship. There are plenty of life rafts, they’ll survive. Become Laker fans. The Sacramento Kings no longer exist.

  31. New survey on this topic.

    Not a single thing about “What problems do you think we need to overcome to build an arena at this location?”.

  32. GSW is the obvious choice, Mike.

    There are Cal, Stanford, Sharks, Giants, A’s, 49ers, Raiders, and GSW fans already. I don’t know, it seems like if you don’t really object to driving to AT&T 5-6 times a year that driving to Oracle should be a huge issue.

  33. Mike, you’re totally right. Sleep Train Arena is in a great central location with freeway access and plenty of parking. If there’s any public funds that should go that way, I would propose getting public transit out there. And if they wanted a new facility, they could build another one in the parking lot. There’s no need for blowing a giant hole in our city’s budget to put a giant hole into two of Sacto’s main throughfares for a couple of years. The mall site is better than the railyard site but it’s a nice fantasy but not so nice reality. But I guess you have to spend a lot of money to be “world class.”

  34. Touche M. Just drive to San Francisco, it’s going to be a brand new building. You can watch the greatest three-point shooter of all time, Stephen Curry. This is no big loss, to hell with the sorry Kings.

  35. Man, check out the survey I linked to.

    Apparently, everyone in Sacramento supports this arena. We’re just not sure if the KJ statue should go on the East side or the West side of it.


  36. Don’t worry Jason, Sacramento is “world-class” either way. It’s the capital city of a state that has more people than most countries. It’s never going to be a minor-league city, other than to idiots that think being a major city is related to having a big-league sports team. Obviously, Sac is a major city, even if it isn’t the most flashy major city. The Kings can and will be replaced with something. MLS, or MLB or something. Too big of a metro-area not to have something of some sort. Don’t chase! Replace!

  37. Sacramento is a major city in the very same way Omaha is.

    You may not like that result, but there it is.

    Someone’s gotta do the real work around here!

  38. Jeff S:

    In fact, the two issues are completely separate, as you suggest. The Hansen group bid has been referred to as a ‘buy and relocate’ bid. But they do not have the right (much less the gumption) to insist on the two items being linked.

    I don’t expect it to happen (for a bunch of reasons), but it is entirely possible that the NBA could approve the Hansen group as new owners of the Kings, but either deny or postpone a decision on relocation. It would be very interesting to see what the HoG (sorry, but that’s the acronym) chose to do then… do they buy and hope that Sac can’t get it’s act together, then relocate later? Or do they quietly pull out and look for another portable franchise that isn’t likely to be “saved” by local politicians (yes, we’re all thinking the same thing here aren’t we?).

    To repeat a comment made the other day in another thread, no-one should be of the opinion that the NBA ‘has’ to do anything. Since all franchise locations are in existence effectively “at the discretion of the league”, there is no liability on the NBA itself for refusing to allow a relocation for any reason… or no reason at all if they so choose.

    Neither the Maloofs nor the Hansen group ‘own’ the Seattle Supersonics basketball team. The league retains all rights to it, and may do with it what it wishes. The Maloofs own the Sacramento Kings, an NBA team located in Sacramento. The Kings are no more a portable asset than the arena in which they play is.

    They can only be moved with the consent of the league. While that consent might not unreasonably be withheld, the league itself decides where and when it operates. Not it’s franchise owners.

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