Hansen throws more money at Kings, Sacramento group calls him “desperate”

You know, when I first referred to the custody battle for the Sacramento Kings as a bidding war a few weeks ago, I meant it metaphorically: Sacramento would present a fancy piece of paper swearing that its arena plan wasn’t held together by spit and chewing gum, Seattle would counteroffer with a promise that so long as the NBA plays there all league officials will receive a lifetime supply of fresh sockeye salmon, like that. But lo and behold, what erupted over the weekend looks like an honest-to-god bidding war with cold, hard cash:

  • On Thursday, with a looming deadline set by the Maloof brothers — the current owners of the Kings who had been all but forgotten in this back and forth between the proposed new owners in Seattle and Sacramento — for Sacramento bidders to match the Seattle offer for the team, USA Today reported that the Sacramento crew was ready to raise its bid by $30 million, to cover the nonrefundable deposit that Chris Hansen had committed to in offering to buy the team from the Maloofs back in January.
  • On Friday, Seattle’s Chris Hansen countered by abruptly raising his bid by $25 million, “as a sign of our commitment to bring basketball back” to Seattle. Hansen would only be paying a pro-rated price for the Maloofs’ shares, so it’s not actually $25 million more in real dollars, but the total team value in the sale offer would rise from $525 million to $550 million.
  • The Sacramento group called Hansen’s increased offer a “move of desperation” (in the Sacramento Bee’s paraphrase), and predicted it wouldn’t be enough to sway the NBA’s decision one way or the other.
  • Meanwhile, Sports Illustrated ran an article outlining all the things that are dodgy about Sacramento’s arena plan, and the website Sactown Royalty ran a long rebuttal saying that Sacramento is really really trying here, so get off their case okay?
  • Oh yeah, and while this was all going on, a Seattle judge dismissed a lawsuit against Hansen’s proposed arena, though only because all the financing details aren’t finalized, so there’s every likelihood the suit will be refiled in a few months.

Phew. So all this certainly sounds like stuff that, on balance, would at least marginally increase Seattle’s odds of landing the Kings — except that, as I hope I’ve made clear by now, whatever process the NBA uses to determine where the team plays next year isn’t going to be nearly so straightforward as weighing two purchase offers, or even two arena deal offers, and seeing which one pencils out to be more lucrative. Both the Seattle and the Sacramento groups have come up with plans that will get them in the conversation; what happens from here really is going to come down to internecine NBA owner politics. So I expect the Sacramento Bee’s source is right about one thing: Whatever harebrained rationale the NBA ends up using to decide the fate of the Kings, a pro-rated $25 million in cash probably isn’t going to be it.


30 comments on “Hansen throws more money at Kings, Sacramento group calls him “desperate”

  1. I wonder what the NBA Players Association thinks of all this cash sloshing around when the NBA cried poverty last year. There will be a lot of NBA sausage making this week.

  2. Revenue sharing…. who will be contributing to it and who will have the owners taken on such high arena expenses they probably won’t be.

  3. Its all about the long term revenue outlook. Which city is better for the league and clean up the mess with the other city afterwards. These are essentially billionaire business owners…..they will follow the money and what nets them more money. Sentiment is very far down their list. I think we know the answer and you can figure out what happens with the losing side when the smoke clears………

  4. Oh, this is just everyone being crazy because it’s tax day and people are bleary eyed from looking at receipts and trying to figure out which travel expenses are not likely to get audited. It will all settle down in a few days…

  5. Yeah, but some owners’ individual interests may not mesh with those of the league in terms of maximizing revenue. For example, if you’re hoping to encourage your city that it can keep your team by throwing money at you — or if you’re hoping to hold Seattle open as your own relocation threat — then you might want to keep the Kings in Sacramento even if you think Seattle would be better for the league overall.

    Or it might just come down to whether these guys want Chris Hansen or Vivek Ranadive in their club. Does one of them have a mom who can bake cookies?

  6. Neil: Absolutely true. I would also add that small market owners might prefer that Hansen pay a hefty expansion fee that all owners share as opposed to a modest relocation fee and enrichment of the hated Maloofs… though it seems the latter is likely to happen in any outcome here.

    Well, if Frank McCourt can badly mismanage the Dodgers and still walk away with a huge profit…

  7. What will probably be it is this:

    Hansen and the Maloofs “conspired” to come up with a valid contract that no one can think of a reason to reject.

    Contrast with:

    KJ’s group has said, “We will too!”, and has not a thing in writing.

    I gotta go with Hansen here.

  8. This is not a sign of “desperation” but a sign of how serious Hansen is.

    Meanwhile the Sac group just sits there and refuses to put their offer in writing as requested by the Maloofs stating they are working with the NBA.

    This lawyer is Sacramento’s article is way off….The NBA is not the one deciding on offers. They are simply approving the sale. There is a major difference, the Maloofs have a signed PSA with the Hansen group.

    The question will be for the owners is Hansen and Ballmer fit to be owners and is their arena plan sound? The question is not which bid is better,that is not the goal of the meeting with the BOG this week.

    If by some miracle it is no, then everything gets kicked back to the Maloofs and it is up to them whom they wish to enter a new PSA with….The Maloofs can easily give the “bird” to Kj and his group and sell to someone else or sit on the team for another 10 years.

    The NBA does not have an Anti-Trust exemption hence why it only takes a simple majority of owners to move a team and they cannot force the Maloofs to sell to Kj’s group or anyone for that matter.

    The Sacramento group balks because they do not want to pay a $550M valuation for this team that is based on the team being located in Seattle. The real valuation is far closer to 400M.

    In January 2012 according to Forbes the team was worth 300M….To go from 300M to 550M is impossible without a new arena or major TV deal which Sacramento has neither of.

    The NBA has been orchestrating this all along and will approve the sale and subsequent relocation of the team. On a ESPN survey of 35k people, 71% think the NBA should allow the Kings to move to Seattle….astonishing numbers from normal fans.

    Get the moving trucks ready….

  9. When the Bee article noted that $25M is not a great concern in the grander scheme, what they didn’t realize is this comment should apply equally to both interested parties.

    No big deal? Then cough it up.

    Or shut up.

    O/T: Condolences to all in Boston today. We are all with you.

  10. That’s what I was thinking, with regards to the “desperate” issue. Sacramento is only going to piss him off, and he may bury them with an offer they could never hope to match just for spite. The Seattle group appears to be the ones with all the money, so I hardly believe they are “desperate.”

  11. You may be confusing desperation with being under the gun (since there’s a BoG about to vote on a purchase/relocate to move the Sacramento team to Seattle in Hansen’s hands). The Maloofs can’t exactly submit a second binding PSA for them to consider to a second group, the whole plan is for KJ to intercede with the NBA and offer them a solution that doesn’t relocate the team and gets the Maloofs out as well.

  12. The fact that the NBA would even consider some hedge-fund guy like Hansen, speaks volumes about what they think of the Maloof’s and what is about the happen to Sacramento. What does he care about how much he has to spend? He made his fortune investing other people’s money. And probably via massive amounts of insider trading, but no way to know that for sure. More power to him, either way, so far as I am concerned.

  13. Mike, Hansen is signing a guarantee of a net worth of $300 mil and Ballmer has 15 billion. Very little is known about how much money Hansen has (beyond that it’s probably more than $300 mil). He hasn’t hit Forbes’ billionaires list yet, though.

  14. I think that the Hansen 25 million dollar increase in the valuation of the Kings is not desperation, but I don’t think it matters much. It is more like noise, than anything else.

    I guess Hansen could increase the bid significantly; but that might not even matter to the BOG
    . A significant increase could start a real bidding war, which would not only be restricted to the parties involved now. Some other very wealthy interest could make a higher bid in order to buy the team to do what they want with it.

    Why not put the Kings on e-bay as has been commented? Really, why not? I bet the bid would go way higher than it is now if it were put on e-bay.

    Anyway, the NBA has all the cards. The NBA could get out of the “Hansen’s bid is higher” talk real easy. The NBA could approve the sale gaining the Maloofs the higher bid (if Hansen does indeed have the higher bid), and not approve the relocation of the team. So, Hansen could be told this before the final vote, and withdraw his bid. The Maloofs could then not complain that the NBA had rejected a higher offer for the sale.

    Anyway, the Hansen thirty million deposit is reported to be non-refundable. Were the NBA to insinuate to Hansen that he should withdraw, that could be the reason for the reported request from the NBA that the Sacramento group be ready to pay Hansen thirty million dollars.

    Then, I guess, it would be up to the Maloofs to sell, or not. I do not know of any leverage the NBA could use on the Maloofs to convince them to sell to the Sacramento group; but there is talk of the large NBA loan. There may also be some legal process to remove an owner in the NBA constitution; or even some performance type clause that would prohibit making no real effort in having a decent team.

    The preceeding was straight up conjecture, some built on conjecture.

  15. Ooooo, Ranadive wants to go global. That’s original.

    http://www.sacbee.com/2013/04/15/5344386/sacramento-kings-bidder-ranadive.html

    Anyway, Hansen has won the 7% stake in the team, pending final NBA approval. He was already prequalified.

    Why would the group of owners Sac assembled NOT bid on that 7%? That just makes no sense to me. As does their unwillingness to produce a written, binding offer. I think this 7% is a huge deal for Hansen, just as much as the pod’s decision not to bid was. Both sides clearly indicated their intent with their actions here.

    I think it’s still first and goal at the 1. Play clock just hasn’t hit zero yet.

  16. Maybe the NBA could use a Shahid Khan-style owner who can promote internationally… although you’d have to convince the NBA to support streaming or get the product out on int’l channels more.

  17. I like your analogy, M. Mine is more like a boxer that has been getting pummelled round after round, and then goes back to his corner and they say, “man you’re looking good out there. this guy’s getting tired, man. you’ve taken his best shot, he’s getting desperate.” You know? No decision this week? I still don’t understand why we can’t have a two-team deal here. If you have two cities that really want teams, and two arenas and two groups with fists full of money, then what’s the problem? Oh yeah, Sacrmaento is lacking at least two out of the three deal-breakers, that’s probably why. It doesn’t make me feel happy. Sac should have gotten it’s act together a long time ago. (where’s the dead-horse button?)

  18. Well, there could be a two-team decision, but I wouldn’t hold my breath on that. There’s too much owner sentiment against it. Sacramento is a profit-sharing “taker”; Seattle would be a profit-sharing “maker.”

    If you can convert a taker to a maker, seems like that’s the deal you go with.

    On the delay:

    http://www.sacbee.com/2013/04/16/5347002/sacramento-kings-nba-vote.html

  19. By the way, this “delay” isn’t a delay after all. In January, the NBA adopted a new bylaw, specifically for this situation (or so I’ve read). Now, the committee meets and issues a recommendation, and then, 7-30 days later, the BOG votes. So if the committee issues their recommendation on Friday, the earliest the BOG could vote is the following Friday.

    I think it’ll be closer to 30 days. I think they’re very confident the Seattle deal will work, but might prefer a credible offer, if Sac can assemble one. KJ’s press conference today seemed to say that the Sac team will not match the Hansen offer (whatever 65% of $550M is).

    I also think there are legit questions about both arena deals, but Seattle has a lead. They just want to make sure.

    I’d say, in theory, the vote could come next Friday — but don’t count on it. It’ll be closer to 30 days. It may be exactly 30 days. Third Sunday in May?

  20. MikeM, the arena expenses are deducted from revenue sharing. Hansen has a lot of arena expenses due to higher “imputed additional rent”. He may be able to create a RSN, but usually those further help shield from paying into revenue sharing. It’s not as simple as saying “bigger city, more revenue” and that’s probably why the accountants need some more time to project which deal is more likely to pay into the league.

  21. According to the Scarborough Research Sports Marketing Surveys, Sacramento has over twice as many “high interest” NBA fans. Sacramento had significantly more “high interest” NBA fans, even when the Sonics were in Seattle.

    Sacramento even had more “high interest” NBA fans than the Sonics in the Sonics playoff year 2004-2005. Sacramento has 13% high interest, and the average for when the Sonics were in Seattle was 7.9%; that Seattle average spiked to 8.9% in the 2004-2005 playoff year. That is still far below the Sacramento percentage.

    The Seattle-Tacoma Metropolitan Area has about 3.5 million people. The Sacramento Metropolitan Area has about 2.5 million people. If you do the math, you will find that even though the Sacramento MA has less people than Seattle; Sacramento has a significantly higher number of high interest NBA fans, and has had the significantly higher number when the Sonics were in Seattle.

    The Seattle market for the NBA is not all it is cracked up to be.

  22. Two comments deleted for personal attacks. It’s not that hard to criticize the post and not the poster, people. Please try again.

  23. The Seattle Metropolitan Area had a population of 3,500,026 in 2012, according to the US Census.

    Sacramento had a population of 2,527,123 in 2011, according to the US Census.

    According to the Scarborough Research survey presented in “San Antonio, Memphis, Salt Lake City Top NBA Markets for Avid Fans” on 21 Dec 2011 at SportsBusiness Daily; Sacramento is the 14th top market for high interest in the NBA. Those with high interest in Sacramento are 13% of the population.

    The Scarborough Research survey presented in “Which Sports Have the Most Fans in Seattle” by Gene Balk on 28 Jan 2013 at The Seattle Times, and “With Worse Fan Support Than Spokane, Can Seattle Get Its NBA Mojo Back?” by Gene Balk on 15 Jan 2013 at The Seattle Times, found that out of the 78 markets surveyed Seattle is ranked 75th for high interest in the NBA. Those with high interest in Seattle are 4.1%.

    13% of the Sacramento MA population equals 328,526 people with high interest in the NBA.

    4.1% of the Seattle MA population equals 143,501 people with high interest in the NBA.

    Even though the Sacramento MA has a lower population than the Seattle MA, Sacramento currently has more than twice as many people with high interest in the NBA.
    Sacramento 328, 526, and Seattle 143,501.

    The percentage of high interest fans in Seattle averaged 7.5% from 2000-2008, while the Sonics were in Seattle. Sacramento still had a higher number of high interest fans.
    Sacramento 328,526, and Seattle at 7.5% is 262,502.

    The percentage of high interest fans in Seattle spiked in 2004-2005 to 8.9% when the Sonics went to the playoffs. Sacramento still had a higher number of high interest fans.
    Sacramento 328,526, and Seattle at 8.9% is 311,502.

    Sacramento with a mediocre team, which has not been to the playoffs in years, has a higher number of people with high interest in the NBA, than Seattle had in a playoff year. The numbers favor Sacramento much more in the non-playoff Sonics years.
    Those Sonics years were before the emergence of the Seattle MLS Sounders.

    I would think that the larger number of high interest fans in Sacramento would mean a higher number of plain interested fans in Sacramento. I would think that this would also mean higher TV viewership in NBA games in Sacramento, than in Seattle.

    The Seattle MA may have more population than the Sacramento MA; but Seattle does not have a better NBA market than Sacramento.
    What matters in a market is how many people in that market buy the product, not how many people are in the market area. Sacramento has a larger number of people that buy the product of the NBA than Seattle does (and had). Sacramento has significantly more hardcore NBA fans.
    Seattle is 65% below the national average in hardcore NBA fans.

    Then, to demonstrate the weakness of the Seattle NBA market “Poll: Loss of Sonics Won’t Bother Most People in Seattle” by Johnathan Martin on 05 Jul 2008 at the Seattle Times. The article describes the scientific Elway poll which found that 78% of Seattle citizens did not care about the Sonics leaving.

    I hear a lot of talk about Seattle having this great NBA market that is much superior than the Sacramento market; but there never seems to be anything real that backs the talk up.

    If I were on the BOG I would have serious doubts about the market for the NBA in Seattle.

  24. “If I were on the BOG I would have serious doubts about the market for the NBA in Seattle.”

    Doesn’t change the fact that the Maloofs HATE Sacramento and will probably find other outsiders to sell the team to if the Seattle guys get rejected. Once again, the only way the Maloofs sell to Sacramento is to get the Larry Ellison’s and Steve Ballmer’s of the world on board so the Maloofs can bleed every single penny out of them.

  25. I have been reading the threads, given I have been around Stern for 30 years. Here’s the basic parameters in the Stern and sports in America world. 1) Government support, will the local municipality built the sports factory. 2) Cable TV deal—made possible by Cable TV socialism due to the pen of Ronald Reagan in 1984 which changed the dynamic of cable TV and forces the cable universe to buy a product than few want 3) corporate support. Fans don’t count, TV ratings don’t count. Owners want customers. Stern is loyal to the first leg of his bar stool, government support, Mayor Johnson is giving him that. Of course Sacramento fails on many counts, the TV market is awful. Comcast would love to dump the market because in the world of 88 percent cable fees, 12 percent advertising, the Sacramento market under delivers in terms of ads. Where is the corporate market in Sacramento? Lobbyists? There is none. Sacramento and Oakland are about the same, Oakland might be better and the Warriors want out. As far the the Sacramento DMA, isn’t Stockton part of them DMA? Isn’t Stockton having municipal issues because of being broke partially due to an arena project? Fans are short for fanatic. Owners don’t care government spending, just give them a 92-8 lease with 92 percent of all arena revenues of all events going to an owner. That is what Michelle Rhee’s husband will be offering. The question in Sacramento, how many customers exist for Kings games as opposed to well heeled Amazon, Starbucks and Costco employees who can become Sonics customers and buy merchandise and spend on in-arena meals and valet parking. That’s is what it is all about.

  26. There is the thing, there is nothing that really shows that those Amazon, Starbucks, and Costco employees would be NBA fans. There is also no estimate of any huge number of those employees in the future. Several thousands of individuals, who may or may not be NBA fans, are not a good thing to bet an NBA market on.

    Seattle just does not have much interest in the NBA. When the Sonics were here you never heard anyone talk about the Sonics. There were no discussions about the games. No one talked bad about the Sonics, they just never came up. Very few people cared. You did not go around town and hear people playing Sonics games on the radio. When the Seahawks play, you hear people listening to the game on their car radios everywhere in Seattle. The same is true when the Mariners are in contention. The Sonics were never like that. Most people didn’t even know the names of any of the Sonics players.

    I stumbled across those articles about Seattle interest in the NBA, and that Seattle is not a great market for the NBA rings true to me. I think that in the long term that Sacramento would be a much more stable market for the NBA.

    Sacramento is a proven, established market with a huge number of high interest NBA fans. Seattle may be a market the NBA may wish to be in; but to dump a proven good market for a maybe market is foolish. You take a team from a maybe, poor, or failed market, and then move that team to Seattle.

    I am not trying to put down Seattle, or the avid fans that live in Seattle. I just do not think that the Seattle market for the NBA lives up to even a fraction of the hype.