Stern, NBA at loggerheads over Kings move?

I don’t usually post here late at night, first because there’s hardly anyone around to read it, and second because I’d rather be asleep myself. But I won’t be around in the morning, and there’s way too much news — or at least reporting of sources claiming to have news — in the Sacramento Kings situation to wait on.

First came a report today by Sacramento TV station KCRA that a “source close to the [Kings] negotiations” was reporting that the Maloof brothers, owners of the Kings, had set a 5 p.m. Friday deadline for would-be Sacramento buyers to offer a bid equal to that of the Seattle group led by Chris Hansen. If such a bid was not forthcoming by then, according to a similarly sourced story in the Sacramento Bee, “the Maloofs have said any talks are off with the Sacramento group.”

That’s pretty crazy, and paints a picture of the Maloofs as either desperate to get the Sacramento “whales” to up their ante lest they get stuck with a lower bid if the NBA rules against the Seattle purchase (both sites cited the source as saying the Sacramento bid was “not even close”), or hoping to scare the league into approving the sale to the Seattle group for fear of being stuck with the Maloofs indefinitely. It’s a strange way of going about it, but then, the Maloofs are known for that sort of thing.

And as if that weren’t enough, this evening we got the long-awaited (if also anonymously sourced) leak of what went on in last week’s NBA meetings on the Kings issue, courtesy of indefatigable Seattle KING5 reporter Chris Daniels. And man, was it a doozy:

  • According to multiple sources, reports Daniels, “the second half of the Sacramento presentation [to the NBA] was ‘poor’ — based more on “vision than fact.’”
  • Hansen has estimated that a cable deal in Seattle could generate more than $40 million a year, nearly double what has been estimated for a similar deal in Sacramento.
  • Accordingly, “several NBA team owners last week indicated their willingness to move the franchise to Seattle.” Yet NBA commissioner David Stern, according to the same sources, “has been quietly maneuvering behind the scenes to propel a Sacramento counter bid,” even working to recruit new members for the Sacramento ownership group.

If true — and it’s always possible that unnamed sources are just trying to spin things toward their own ends, though somewhat less so when a story is sourced to multiple anonymous individuals — then it sounds like we’re getting every lick of the in-fighting that we could have hoped for from an NBA owners’ meeting. Daniels said that “multiple people with knowledge of the negotiations said Wednesday it is still unclear whether a vote will be taken,” which makes sense if there are two competing factions in the room. (A three-quarters supermajority is required to approve the sale.)

It certainly sounds like the NBA owners have recognized that the Sacramento bid is a tad shaky, whereas Stern, at least, is recognizing the value of rewarding cities that come up with arena deals (shaky or no) in response to move threat blackmail. All that means, though, is that NBA owners can read Twitter like the rest of us. As to how they’ll actually vote, I wouldn’t try to predict that at this point if you paid me.


90 comments on “Stern, NBA at loggerheads over Kings move?

  1. Appreciate the late-night update Neil. The Kings and cities on the hook for them are certainly keeping you busy (I bought an epub of your book, so the complimentary website is helping).

    Like most board decisions, they’d prefer to have this come down heavily on one side or the other and not have 1 vote be the deciding factor. It may mean giving Sacramento a bit more time to get more commitments in place. Stern helped put together a deal with Sac that the Maloofs backed out of, so he’s certainly got some sentiments invested in giving them a strong opportunity.

    I think it’s a bit of a crock that the Maloofs voice concern about getting a bid. They can’t accept a second nonrefundable deposit for a binding contract and present both to the league for a vote. KJ is right to take his case to the board directly and get their implied acceptance of his sales agreement and then shove it at the Maloofs.

    Daniels is a bit of a homer for Seattle, which wasn’t in the room for the Sac presentation. If anyone was his inside source, it would probably be the Maloofs trying to cast their “fertilizer” about.

  2. Somehow, I don’t see Stern and Daniels sitting down for brunch after Stern retires. Not a lot of love between them. Daniels built quite a rep covering how the NBA handled the OKC move. Stern took a few jabs at Daniels at the all-star press conference (about 4:15 into the video http://www.king5.com/sports/NBA-commisioner-kings-future-191558681.html ).

  3. chefjoe, I’d love to see an example of something Daniels had reported that was just biased Seattle talk and was proven to be false. He’s a solid reporter, he writes for a Seattle audience, obviously, but I’ve never seen him venture into pure speculation or rumor mongering. There’s ProBasketballTalk writers for that.

  4. http://www.youtube.com/watch?v=e4seEs1wbYw Here’s Daniels talking about how Houston makes it work with their stadiums all together (nevermind that there’s no port and semis in those areas needing freeway access… or train tracks).

    Take a peek at the Google maps for Minute maid park in Houston (and the blocks of parking surrounding rather than … train tracks and port) and compare to the google maps for Safeco field and tell me if they really look so similar. For scale, they say 25,000 parking spaces are within walking distance of minute maid park. If you’re not a metro bus, do you see anything close to that many parking spaces near Safeco ?

    I’d post links to google maps for you but more than one would moderate this post.

  5. Just a little more grist for the mill, here’s KJ’s halftime interview (Bobcats at Kings, tonight’s marquee NBA matchup):

    https://soundcloud.com/deucemason/04-11-mayor-kevin-johnson-raw

    It’s the Stern-BOG split that I find interesting. Really, it looks like Stern has a soft-spot for Sacramento — and I did not expect that — but the BOG is saying, Wow, we know which offer is better.

    I can understand why the Maloofs require a binding offer. They already have one, complete with a down payment. If the BOG rejected that, and the Ranadive team has no legal commitment, what would stop them from offering $300M? Nothing that I’m aware of.

    If the BOG rejects this, it’s extremely likely, I think, that the Maloofs would then create an auction, just like Cohan did with the Warriors. The auction would take about 8 weeks, and we’d constantly know who has the lead.

    But I don’t think it’ll come to that. This BOG is very ready to tell Stern to shut up. They are rejecting Stern’s advice. They might even vote on this BEFORE April 18. I already think they have over 23 votes.

  6. Damnit, I wish there was a way to +1 posts and comments on this website.

    Everyone, you deserve it. How’s that?

  7. But I’m not saying Daniels is a liar, he reports from a definite Seattle Sonics bias. He’s even interviewed Neil to cover different angles (even Hansen quotes Neil and links to his article outlining how the arena deal isn’t the sharp stick to the eye Seattle got with other stadia, and it may even break even).

  8. Of all the reporters on this, I think Chris Daniels is easily the best one.

    The Bee has been rooting for a particular outcome, thus they ignore or intentionally disregard “bad” news. They’re worthless.

    If the Sonics are back next year, Ryan Lillis will be talking about the sure-fire return of the Kings for 2014. Yeah, we have all these whales who have decided to get an expansion team.

    They have consistently ignored the 3700 parking spot donation. Evidently, that donation has no dollar value.

  9. Stern is a smart man. Seattle was D-E-A-D from the ’99 lockout until the team moved. The Mariners are also dead. Stern fought for Charlotte because they filled 23,000 seats for 10 years and fights for Sacto because they filled that arena for 20 years. He’s the ultimate fans’ commissioner.

  10. ChefJoe – No, Chris Daniels is not a homer. That is ridiculous. The only homers here is the entire SAC media and their lackeys of Carmichael Dave and Bruski. They are embarassing the entire profession with their nonsense.

    Ben Miller – SAC has some of the worst fan support in the league over the last 5 years. The days of sell outs are over, long gone. SAC has failed to support their team and that is a fact. Even when faced with leaving, nobody goes. Free tickets and giveaways? Still cant sell out. It is pathetic.

    If Stern was the fans commissioner the Sonics would still be in SEA. One terrible season of attendance (the last year when the team was all but gone) doesnt make the Sonics an unsupported team.

  11. That may be Ben, Seattle sports teams certainly are cyclic in their fan support. Even our UW Huskies were running at below 80% capacity during Willingham years.

  12. It took a SonicsRising post for me to get this point:

    The BOG will not be able to justify selecting the promise of some future offer from Sacramento over the fact of an existing, binding, money-has-changed-hands, vetted PSA.

    Just tell me how they can legally justify that.

  13. I just don’t see how the Sac Group ownership group can come to their own terms and conditions on how they operate, vote, contribute capital/$ anytime soon, let alone by Friday.

    As much as people like to think about attendance track record as a good indicator of the support for the team, the NBA is shifting $ of their revenues to TV which is why I think from a business standpoint only, it makes sense to move the team to Seattle. NHL is a little different as they have a much higher dependency on gate revenues.

  14. JB,

    This is presently true, but will it always be true? Remember in the late 90′s and early double-oh’s there was all of this consternation over falling TV sports ratings. Now sports on TV are hot so some people seem to think that it always will be hot. You’d think people would’ve learned from the Tulip bubble.

  15. MikeM, if Stern thinks Sacramento can get their details nailed down with another week or maybe even a month, he could try to have the BoG vote scheduled for later. Wouldn’t be the first time they’ve pushed back an April deadline for the Kings.

  16. All that SAC Group has come up with is a Dog and Pony Show.
    There is no Binding Agreement to building an arena. No property has been purchased for building arena. Just a non-binding agreement with no money pit forward on a napkin given to the NBA. A merry go around of Potential investors that looks like a 3 ring circus. No money out of pocket by any investor towards the purchase or building of an arena. It is 12:00 Midnight and it’s time to PUT UP OR SHUT UP by KJ’s Dog and Pony show

  17. This whole thing is turning into a good-cop (Stern)/bad-cop (BOG) situation.

    Stern: I’m on your side!

    BOG: But you need to submit a written offer.

    Stern: You better listen to my partner. Wanna hear what he did last time? I’d never do that to you, but I can’t really stop him.

    BOG: Where’s the contract? Just show us the contract!

    Sac: Ummm. Ummm. There isn’t one. But I know what it would say!

    Stern: I can’t really help you. Wish I could.

    BOG: Well, looks like we have a decision to make.

    Sac: You’ll never get a contract out of me!

  18. In response to Chef Joe on Husky Attendance in the Willingham years.

    http://www.ncaa.org/wps/wcm/connect/public/NCAA/Resources/Stats/Football/Attendance/

    University of Washington
    Husky Football Attendance Figures Average

    2005 64,326 / gm 88.7% of capacity

    2006 57,483 / gm 79.2% of capacity

    2007 67,732 / gm 93.4% of capacity

    2008 63,640 / gm 87.7% of capacity

    Only (1) year were they below 80% during Willingham’s 4 years at Washington, either attendance figure’s were in the high 80 percentile or low 90 percentile. So saying they were running below 80 percent during the Willingham’s tenure is a false statement.

  19. I misspoke dawg, I meant to say below 80% at some points during Willingham years. Like those 2006 years.

    http://en.wikipedia.org/wiki/2006_Washington_Huskies_football_team

  20. Why do I keep visualizing that the NBA will reject Hansen and Ballmer (maybe another owner will reach out to them to buy their franchise) and the Maloofs claiming that the Sacramento whale offer is not good enough and them keeping the team for at least one more year? Then, Neil and all of us could keep talking about this a year from now.

  21. Jason, I give that outcome a reasonably high chance of happening.

    The hitch is what I brought up, though. I don’t see how the Sacramento “offer” can be considered better right now. There’s no contract, at all. Not one. Not from the arena side, not from the team side.

    How can Seattle’s offer be considered worse than Sac’s right now? What is it about the Sac offer that makes it superior?

    That’s a trick question. Technically, at this point, there is no Sac offer. There are promises that they’ll try. And that’s it.

    Example:
    Where are they in the EIS process? Where are we in the EIR process?

  22. Oh, and by the way, Jason, if the BOG goes with Sac, and six months down the road there are issues with it, Hansen would have a great basis for a lawsuit.

    What kind of problems?

    The parking bonds simply cannot raise $212M, for starters.

  23. MikeM, imho in Seattle, you have a gung ho ownership group led by Hansen/Ballmer vs in Sacramento, a gung ho city government. In the NBA’s eyes, that’s what is making the Sacto deal equal, if not superior. KJ is willing to mortgage the farm for the NBA and stern is right there with his palms wide open.

  24. @tenfourteen so at the end of the day, not a one dollar is coming out of the NBA’s pocket so why would the league care who is paying for it….unless you think it is precedent it sets by turning down a heavily subsidized Arena deal.

    Jason’s point is a good one…It pains me to think we can be discussing this for another year and it makes me think that by going to Seattle it can send a message that a City needs to put their Stadium subsidy plans ahead of time if they expect keep their team instead of waiting to the last minute hail mary? Wouldn’t this be best for the league so that all the no threat threats can be treated as threats since they don’t want to turn into the next “Sacramento”.

    One thing on the Huskies…They have sucked and their ticket prices are outrageous. If you were to do a $$$ per game I am sure the huskies would be very very high compared to other Pac12 schools.

  25. That’s what the NBA is struggling with. Do I take Steve Ballmer and his $15 billion net worth or do I take Sacramento’s more generous public subsidies? This is why Stern has a soft-spot for Sacramento- because the city is willing to continue David Stern’s three decade run of getting publicly subsidized buildings throughout the counry. The owners are excited about a high priced bidder who boosts all their franchise values. And the Maloofs see either an opportunity to get paid or to keep the team. Also, another owner may turn to Hansen and Ballmer and offer up their team for sale.

  26. Jason,
    That is simply the clearest and most concise summary of the situation that I’ve seen and that will ever been written on the topic. Well put.

  27. KCRA is reporting that Lucchetti is finalizing the deal with the bankrupcy trustee to buy Cook’s 7%. Supposedly, this supersedes Hansen’s offer. KCRA asked if Hansen will sue.

  28. The reason the TV revenue is going up is because sports are the only thing people watch live on TV. Thus that is where all the advertising is moving. Nearly everything else people watch is time-shifted in some manner and the commercials are skipped.

  29. To sum it up one more time… Stern (and the BoG) don’t need to choose between a buyer in Seattle willing to throw money at the league (and the Maloofs) for the Kings and the local, plucky, short on details high on enthusiasm Sacramento can-dos. They can have them both.

    And I wouldn’t necessarily read Stern’s intentions toward the Sac-Whales as an endorsement of either the buyers or the plan. He simply knows there is nothing good that can come out of saying a firm “no” to potential buyers who are still putting money in your outstretched palm.

    I don’t see a Stern/BoG division at all here. He is simply doing what he is paid to do… keep as much intere$t in moribund franchises as is humanly possible. What is the downside to Stern moving deadlines and/or encouraging SacW to keep trying?

    Is Hansen going away? It seems not. He may even stick around to buy an expansion franchise if the Kings sale ultimately isn’t approved.

  30. Chef Joe wrote: ” They can’t accept a second nonrefundable deposit for a binding contract and present both to the league for a vote.”

    That’s not necessarily true, CJ. It depends on the actual wording of the contract. For example, in the instance of a sale that must be approved by a third party (bankruptcy, estate, sports franchise etc…) it would not be at all unusual for the “non-refundable” deposit to be limited to circumstances in which the buyer withdraws the bid once conditions precedent are met. In fact, it’s quite common (even in house sales).

    Look at it from the Maloof’s point of view… having a 100% non refundable deposit in all circumstances (IE: the NBA does not approve the sale, the Maloofs change their minds, it rains on Wednesday etc) might seem like a guaranteed money maker… but it also effectively precludes any other offer being made.

    Who auctions a franchise and then only approves one bidder?

    On the other hand, who would be stupid enough to put down $30m in a non-refundable deposit if the seller can just decide he isn’t going to sell after all and keep your $30m?

    I haven’t seen the agreement, but I would be stunned if the “non-refundable” part doesn’t disappear if the NBA chooses not to approve the sale. If Hansen wouldn’t get his deposit back if he is willing to continue but the league (or Maloofs) choose not to, then he would be suing his own lawyers long before he sued the league or the vendors.

  31. I’ve thought for a long time that the $30M is nonrefundable only if Hansen changes his mind. It would be stupid to make it completely non-refundable; the Maloofs would call up 2 days after the check cleared and say, “Yup, we’ve changed our minds.”

    This was Hansen’s guarantee to the Maloofs that he wasn’t going away, not the other way around.

  32. KevinS: Close, but I think it’s a bit more nuanced than that: It’s actually that because sports is the only thing people watch live on TV, it’s the only thing people desperately need cable for, instead of just going to bittorrent or waiting till it comes out on DVD or whatever. So sports channels can demand huge fees from cable companies, and cable companies can turn around and charge customers huge amounts per month to subscribe, and know that sports fans will suck it up because they have no choice.

    There’s also a related issue: Because sports is the only thing on TV that actually gets a decent-sized audience (everything else is fragmented like crazy), it’s the only place that advertisers will spend big money.

    I don’t expect this state of affairs is sustainable for long, though. If HBO Go actually goes to a non-cable subscription model as rumored, I think that’ll be the beginning of the end for cable TV. Which won’t mean the end of riches for sports leagues, but those riches might be paid out and divided up very differently.

  33. “…and know that sports fans will suck it up because they have no choice.”

    Generally, yes. But if you have, oh, some ethical flexibility, the number of places you can find illegal streams is growing and the streams are becoming better quality. Granted, it’s a couple of degrees more difficult than turning on a channel (not to mention less reliable) and you still need a high speed connection, but if all you want is sports, you can find almost anything being broadcast anywhere in the world on a stream.

  34. Seattle Times is reporting the following:

    The Sports Business Daily is reporting today that the NBA has asked a Sacramento group to cover the $30 million deposit that a Seattle group has given to the current owners of the Kings in case the league decides to not approve the sale.

    The story further states that the NBA wants to make the Seattle group whole in case it loses the bid, in part as a sign that the league “remains high on the market.”

    The story also states definitively that the Seattle group would lose the money if it does not get the Kings.

    Michael McCann, an on-air legal analyst for NBA TV, also said that covering the money would help mitigate possible legal action from the Seattle side if its bid for the team is denied:

  35. @Neil: I totally agree. Sports are really the only reason I keep my cable subscription at this point. I would except sports broadcasts to shift increasingly away from free OTA channels to premium cable channels. The way this years BCS was only shown on ESPN.

  36. So the NBA would like to help Hansen cover up his oddball way of putting a deposit in the Maloofs’ hands ?

    I guess they can ask nice but how many other NBA team purchasers have put a non-refundable deposit in the hands of the old owners prior to the NBA approval ? Hansen runs a hedge fund and deals with risk all the time… if he’d done any research he’d see that he was wandering far off the beaten path with people of dubious honor.

  37. I just spoke to my cousin and he has it on good authority, actually he sat next to this girl on a bus who was at a wedding last weekend and she heard it from the bartender whose wife heard it at Safeway, that the Kings are for sure, maybe, moving to Vegas or maybe it was Blythe

  38. All we know about next week is that there will be a big meeting of NBA owners in New York next Thursday and a press conference next Friday. From time to time I dial up last year’s George Maloof press conference in New York for a few laughs: http://www.youtube.com/watch?v=_VCq10ByI0o

  39. Putting aside ChefJoe’s personal disdain for Hansen (for whatever reason), I actually agree with him for once. During this whole ordeal, I have not been able to figure out how an intelligent individual such as Hansen could trust anyone in the league office given their background. You lie with snakes, you get bit. It was true before, it is true today. Is he really that “obsessed” with basketball that he was willing to do business with folks who have proven time and time again to be flat out swindlers? I guess so. I hope that he, along with the city of Seattle, realizes that NBA is not interested in coming to Seattle as much as everyone around here pretends it is. NBA just used Seattle to get the best deal out of SAC. How many times do you have to get hit in the nuts to learn a lesson?

  40. If Sacramento keeps the Kings, the Mayor and KJ will spin this into a feel good, David and Goliath story while David Stern held the Kings hostage for a fat arena deal with public dollars. While the local politicians and media and Sacramento rolled over and gave the NBA a big chunk of the city treasury. While teasing Seattle’s fans and blowing up a signed contract. But this isn’t over, I’m waiting for Sacramento’s lawsuit.

  41. Jason, thanks for posting the links to the Maloofs 2012 press conference. It’s really strange to hear somebody testify (on behalf of NBA team owners no less) about the perils of an arena plan built on optimistic projections and a discussion about shrinking government resources demanding a fiduciary responsibility. I thought I was reading a deMause article when I was listening to the 1st speaker.

    I’m at part two now, where George looks like a sad puppy about how the NBA railroaded him into a public arena agreement he had marked up days earlier. As Stern was at the helm for that negotiation and was doing the handholding because the Maloofs were unwilling to put more than a pittance in, I’m pretty sure he wouldn’t shed a tear if the Maloofs were ejected at a slightly lower price.

  42. Sorry folks, but even if the NBA owners reject the Seattle guys, it doesn’t mean that the Maloofs are going to sell to the Sacramento guys. Once again, if the Maloofs really cared about Sacramento, a deal would have been made MONTHS ago.

  43. I wonder if the way the Maloofs blew up the previous deal Stern put together (including blaming the NBA for not communicating changes to Sac) had Stern put some threats to them to not expect any more loans from the league and to expect current NBA-Kings loans to be called if they didn’t meet certain targets.

    Considering how relocation fees are kind of arbitrary, couldn’t Stern and Clay basically pin any Kings relocation fee to something absurd ($400M, due immediately) and make it practical block rather than one written in stone ?

    http://www.washingtontimes.com/news/2009/feb/26/nba-set-to-acquire-175-million-line-of-credit/
    And the Sacramento Bee reported last week that the Kings were on pace to lose more than $25 million before unloading the salaries of center Brad Miller and several others via trade last week.

  44. Speaking of George Maloof, the unnamed source in Aileen Voisin’s Bee article sounds a lot like him. Aileen reports that the Maloofs would accept a matching offer from the Ranadive Group: http://www.sacbee.com/2013/04/12/5336141/ailene-voisin-maloofs-wouldnt.html. My take on this is that this the final jockeying to get the highest possible price for the Kings and that the Maloofs are still crazy.

  45. The bigger surprise to me (in Seattle) is that the Maloofs could spin around their windfall and buy an NHL team. Maybe the Maloofs would like to run an NHL team in Las Vegas for the rest of their days, but I do wonder if Hansen was willing to give them tons of money on the chance they’d move into a Seattle arena.

    Major downside being, a Maloof-led NHL team would be the Seattle NHL team for 30 years.

  46. ChefJoe, that’s why I think that this was a George Maloof leak. The ridiculousness and the crassness are there on full display in the article much like his performance at last year’s press conference in New York. “Hey, George, how’s that renovation of Sleep Train Arena you talked about last year going?” Oh yes, and the economist in that video, works for Beacon, a highly respected firm in the economic consulting field despite what you read in the Sacramento press. I think the highlight of next week’s press conference will be George Maloof’s performance- whether he sells, to who, or if he doesn’t sell.

  47. Well, Seattle’s I-91 challenge was ruled to be too early on basis that final transaction documents not approved. The city attorney was saying “we don’t have a final arena deal” even if MOU’s whole purpose is to specify the terms to go into that final arena deal. Sacramento a little happy (about “not have a final deal”) and a little sad (I-91 ruling won’t block deal, although 1 hr schedule for hearing indicated they weren’t going to evaluate I-91 today).

  48. Sacramento will have its day in court on this one too. This goes back to David Stern basically, in my opinion, framing this as a contest to see who puts a shovel in the ground first. In other words, Seattle is being used to get Sacramento a new, publicly funded arena. #HereWePay

  49. Sacramento also launched its EIR process, which is expected to take 12-14 months.

    Also, their partnership has a new member. What’s that get them up to now? 45 people?

    Doesn’t the NBA have to vet each one of them?

  50. I think that’s the end of the whales. The Bee Tweeted that they have sent investors away. That could also mean I offered 5 bucks and they told me no.

    The Internets and the media seem to be calling this one for Sacramento but who knows what goes on in the minds of the Maloofs and if there’s an actual “rift” between David Stern and the owners. Of course, there’s only been one press conference by Chris Hansen compared to multiple KJ press appearances. So the air war has been fairly one-sided. It’s more like a battle but as Neil said, “owners can read tweets too.”

  51. I still don’t see how you legally justify choosing the words of a group of people over actual contracts. It makes no sense at all.

    If it is going to be Sac, they can’t practically approve such a sale by April 19. They have to negotiate with the current owners for a contract which they would then send to the NBA for approval. There’s really no way they can say it’s Sacramento on April 19. That seems impossible to me.

  52. So…what was the purpose of the contract that Hansen signed with the Maloofs? Does anybody else get the feeling that there are a few attorneys who’ll be buying boats soon?

  53. Wouldn’t the league have to reject the Hansen offer first before moving onto the Sacramento group? I don’t think the Maloofs can dump Hansen/Ballmer right now. Aren’t they bound to an agreement in which they exclusively work with Hansen/Ballmer? I thought the Maloofs could only review the Sac. offer if the Hansen/Ballmer falls through. If I were Hansen/Ballmer, I would be pretty annoyed if I lost and I probably wouldn’t come back for more. There could be a lot of burned bridges here.

  54. MikeM. The attorneys and judge said today that Sea has no binding contract with Hansen and that won’t change for months.

  55. ChefJoe, I think MikeM means whatever legal arrangement Hansen has with the Maloofs.

  56. If the BOG rejects Hansen, what does that mean?

    I don’t think the BOG can force the Maloofs to sell to anyone. But I’m curious, what would come after that?

    I think Hansen winning that 7% from Cook is very important.

  57. theoretically, the BOG could reject the sale to Hansen and Ranadive’s offer could be a backup but Hansen upped his bid and will now ask for approval for the 7%. probably Hansen getting rejected is moot because the 3rd worst team in the West is now worth $25 million as of today.

  58. $550M, you mean.

    Anyway, remember back in the old days, when you were all laughing at my ebay comments?

    I long for those days.

    When Stern said he didn’t want a bidding war, I now assume he was being ironic. Did he wink when he said that?

  59. So 65% of $525 M was $341 M. Now Hansen’s gone to $358 M for that 65% on what was supposed to be a binding agreement, but the Maloofs were publicly asking for a backup offer and then extended that deadline.

    I’m sure many team sales examinations are ugly, but wow do the Maloofs make a mockery of normal business protocol and process.

    Still laughing at the idea of the Maloofs buying an NHL franchise to play in Las Vegas, particularly after watching Jason’s video of the 2012 press conference that cited the housing crunch and city finances in Sacramento. Las Vegas is one of those places that has barely had any housing recovery… I think they envy Sacramento on that. Also, NHL teams tend to go bankrupt.

  60. If the Maloofs get an NHL team, they could buy one, move it to Seattle, and be a tenant in that arena, and not pay those pesky pre-development costs.

  61. http://sportsillustrated.cnn.com/nba/news/20130413/sacramento-kings-sale-david-stern-seattle/

    Best summary so far, outside fos, that is.

  62. MikeM,
    I just checked e-bay for Kings NBA and didn’t see a team listed there, but maybe there’s a special per-approved high rollers auction run at NBA.com somewhere.

    PS: the SI article is rather slanted. Stern indicated a possible delay, but there is none currently and it’s not giving Sac time to “catch up”. Also, this Seattle plan may have been percolating in Hansen’s head, but it wasn’t being studied at large until Feb 2012.
    “The delay has created more time for Sacramento, which also presented its own plan to keep the Kings. Sacramento has been scrambling to assemble an ownership group and arena strategy that can compete with Seattle, which has been developing its plan for more than two years.”

  63. Also, the SI “league source” appeared to run down points made by Seattle’s presentation and none made by Sac’s. (hrm, who would be in the room for Seattle but not Sac). The unnamed “owner” is someone who feels they have the knowledge of Sac real estate values and says “they won’t work” but the only reason Hansen’s numbers work is because he says “we’ll cover any public debt service shortfalls from the team’s end” as if that’s a better business plan. Aren’t most NBA teams losing money with their generous public subsidies Stern (cough)?

    I guess Seattle did hire a sports consultant in 2011 so maybe we’ve been studying it for two years, but Sac has a long history of studying new arena options all over town, including downtown.

    Lastly, the statement “The parcel is owned entirely by the group that is trying to buy the Kings” sort of neglects that there’s a city street going straight through center court of said “parcel” if I want to be pedantic.

  64. Also, one thing not being said about that street vacation… Seattle hasn’t filed for it yet. Kind of tough to start building if you can’t build the center of your arena yet.

    http://www.seattle.gov/transportation/streetvacations.htm
    How long does the vacation process take?
    The vacation process can take 8-10 months depending on the issues identified, the level of environmental review, and the complexity of the project.

  65. That’s a difficult situation for Sacramento, because they are really having to get creative just to match whatever offer is currently on the table. Only to have the Seattle people up the offer again. Not good for Sac.

  66. I can’t take seriously any article that posits the NBA as having either a heart or a head.

  67. Well, now Sac’s saying that Seattle can’t increase their bid:

    http://www.sacbee.com/2013/04/13/5339829/sacramento-group-seeking-to-buy.html

    I think this article is dead wrong, in a number of ways.

    “A legal expert told The Bee that the NBA has the right to accept a lower offer.”

    That may be true, but that doesn’t mean the Maloofs have to accept that offer, if it was unsolicited.

    This increase in Seattle’s offer really has Sac in a tizzy, and it’s hard for me to see how they didn’t anticipate it.

  68. Sacramento didn’t anticipate the team being for sale and missed the boat on buying Bob Cook’s 7% too. I think Dow Constantine’s playing to win quote was awesome as Mayor KJ has come off as a grandstanding, arrogant, and attention hungry through all of this.

  69. That’s really funny, Jason. This is a great site, and it is making me lazy. I just get a thought in mind, and you guys fill-in all of the blanks.

  70. Dow Constantine talks big for a King County Executive. The County contribution to the Seattle arena starts at $5 M under the NBA-team-only scenario.

  71. ChefJoe, don’t you see how difficult it will be for the BOG to legally justify favoring a “promise” of $X, when compared against a legal, valid PSA?

    If there was something wrong with that PSA, we’d have heard about that already. The PSA is valid. I think that’s a given at this point.

    So you’re going to accept “They know what we’re offering” over a valid contract? If they did that, I think at some point they’d have to show their work. What legal process did they go through that allows them to favor a “promise” of $525M over a written contract that offers $550M.

    Sac “whales” are hoping that the NBA takes a huge leap of faith that they’d be prepared to defend in court. Because I have zero doubt about Hansen’s intent here.

    “Promise” over “Contract.” How?

  72. I think Sac has been putting together a team in response to this offer at a good pace considering there’s no “Ballmer sized” whale invovled. They may have a ready-to-go sales contract ready for the Maloofs to sign by Wednesday and an arena plan/framework very similar to one the NBA helped them put together a year ago. If the league will only accept an offer (assembled on deadline, after learning their team was being shopped for new owners in January) with all the “t”s crossed and the “i”s dotted they may need to extend their deadline a bit. If the NBA has a heart and believes in cities having a bond with a team (who knows, New Orleans’ league ownership surprised me) and supporting them when they offer money to the game, they’ll like Sac’s deal.

    With the way arena operating expenses are deductible from the new NBA revenue sharing agreement, maybe Hansen isn’t so concerned if ArenaCo has to bill TeamCo significant money to pay arena finances. Arenas don’t earn money normally, so maybe he can use that as a way to own an NBA team and sop team earnings away from paying into revenue sharing.

  73. And again, Seattle’s arena plan seems far more set than Sac’s.

    One single factor: Selling $200M in revenue-anticipation notes, versus the speculative value of Sacramento’s parking being $212M or more…

    Advantage Seattle on that one. Could keep going down the list here, but there’s not much point. Once Seattle wins that single point, it’s close to an insurmountable lead.

    I think it’s a good 4-1 they’re headed to Seattle.

  74. The Seattle MOU requires that the bonds be “of the same cost as GO” bonds so they’ll be “GO bonds” because revenue anticipation bonds have higher interest rates. Seattle’s MOU makes it sound like they’re going to be revenue-anticipation bonds but when you get things from the actual city budget guys they know what’s up and say they’d be LTGO bonds.

    Future parking revenue (and hotel taxes) are real assets and there is some value to those. If the NBA financial guys haven’t tried to get an estimate of their value (since it was proposed last year) then Sac might get some other fees, but that’s not exactly the NBA’s problem.

  75. This morning’s Sacramento Bee feels a lot like reading a final plea for clemency.

  76. I agree Jason. I think M hit it, when he said the odds are about 4-1. I was thinking about it, and if I was a bookmaker, I would put it somewhere between 3-1 and 4-1, maybe higher. Sacramento could get the league back in the future, I truly hope, but it might take awhile, and after a few years we’ll see if the heart is still there.

  77. Let’s see. For Team Ranadive to match the offer, they’ll have to come up with $30M up front to pay Hansen plus add more to match the valuation of Hansen’s revised offer. It was very quaint when KJ was basically saying the offer back in January valued the team at absurd levels. Sacramento’s opening is if the NBA thinks that their arena plan is more realistic and if the league is adverse to relocating the Kings again for the second time during David Stern’s tenure.

  78. The Kings are long gone guys….

    Here is why:

    In 2004 it was estimated it would cost $559M to build on the site they are proposing….In 2013 that has fallen 214M to 345M? Wow KJ, you are not a smart guy when it comes to numbers….Plus 5 owners need to be bought out….Really? How did this get missed until now? Plus you do not think the Sac investor group eyes rolled on this one? Knowing KJ he forgot to mention this and it was news to them.

    On this same site any cost overruns are being paid by Sacramento through parking and hotel taxes….While Hansen has agreed to pay for any and all cost overruns in Seattle and he owns the land already. Not good for the Sac group.

    TV is getting bigger in sports not only because it is live but because of all the devices that are out there now. People are watching on Tablets and Smart Phones along with TV. It used to be each household had 1 device (TV in the living room), now the average household has 3-5 devices…..This is creating the media rights bubble that will not burst anytime soon but only get larger over the next 20 years.

    Seattle will continue to grow as a metro region and TV rights will continue to grow far faster than Sacramento. Right now it is 80% more? That number will only grow as time goes on.

    This plus the 1M TV sets in the Sacramento market are blacked out to the Warriors. When the Kings leave the NBA will get 2 new TV deals. One for the Warriors which will propel them to the largest 1-team media market in the NBA……It will be larger than Chicago.

    That means every franchise gets a boost in valuation because of the new TV deals and it allows the Warriors to put more into the league’s new revenue sharing program….This plus the Warriors will sneeze and get their new arena in San Francisco.

    The Maloofs threw an olive branch to KJ’s group but they will not match the Hansen offer because the Kings are not worth 550M in Sacramento. The 550M evaluation is based on the team playing in Seattle in a larger market, bigger TV deal ,and corporate support. KJ’s group knows this full well and they do not want to overpay for the team.

    This is why Stern said the Sac group’s offer “was too low”, He knows why now as that time he did not take into account the markets and their differences.

    Because of this disparity of valuations the Sac group is sitting and praying the NBA shoots down Hansen which puts them at great leverage to buy the team for a more realistic price tag that reflects buying a Sacramento NBA team not a Seattle one.

    This is why the Maloofs wanted a binding offer to match Hansen from the Sacramento group but they have yet to receive one because of this fact. These Sac investors know better and will not overpay, hence why they keep blowing deadlines…..that is plain and simple smart business.

    In the end Hansen has played the system perfectly. It was the NBA who told the Maloofs sell to the Hansen group. There was not an open bidding process like the Warriors in 2010 because the NBA is sick of Sacramento and the relocation committee gave assurances to the Maloofs it would get approved.

    Otherwise the Maloofs would have opened up the process to secure the largest bid possible. They know full well the team is not worth anywhere near 550M in Sacramento.

    The Maloofs loan to Sacramento gets paid by giving them the current arena. That covers that debt since they own it 100%.

    It is over in Sacramento and it has been for a while. KJ and the Sacramento politicians are the ones to blame.

    Fans blame the Maloofs but it was them who paid the luxury tax and lost money for years trying to win a title….Paying Bibby, Webber, Miller, Peja etc….They were not bad owners but they were in a bad city with a bad government.

    For the record I am Warriors fan from the Bay Area so I am neutral.

    Seattle Supersonics return in 2013…

  79. Good summary, SBSJ.

    I saw the TV ratings in this article:

    http://www.king5.com/news/Kings-to-Seattle—the-final-push-begins-202924981.html

    So, in Sacramento, 10 times as many people watch 49ers games as watch Kings games. That’s amazing.

    I know a lot of Sac residents hate it when I say this, but Sacramento is really just a big East Bay town. We’re Concord on steroids (really, we are way, way bigger than Concord, so that’s me really exaggerating).

    I’ll root for the Warriors. Why not? I already root for the 49ers and Giants, even though I haven’t gone to a 49er game in decades. They’re all TV sports to me.

  80. Well, my grandmother is/was a big fan of the Mariners but after continuing terrible seasons and the departure of her old favorite, Ichiro, she’s sometimes surprised when I mention there was a game that had finished up that day.

    I’d be curious about the ratings the last time the Kings were above 0.5 (Adelman years) and prior to Maloofs trying to ship them out of time.

  81. That was a good post, SBSJ. M, those tv numbers are incredible. It doesn’t even seem possible, the NFL is a monster.

  82. That sbsj post was plain conjecture built upon conjecture.

    Anyway, other than that paragraph story in some sports website, from an unnamed source, who is it that says Sacramento has to pay 30 million dollars to Hansen, if Hansen does not get the Kings? There seems to be no concrete confirmation of this. Also. some deadline given by the Maloofs is not a deadline given by the NBA.

  83. The NBA likely sees fit to reimburse Hansen his $30M because they don’t want to throw a good prospective owner under the bus.

  84. Yeah, but other than an unnamed source in a paragraph long SportsBusiness Daily article, is there any confirmation of an NBA request to Sacramento to pay Hansen 30 million dollars if Hansen doesn’t get the bid? I can’t find any real confirmation.

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