Multiple reports: NBA relocation committee votes unanimously to keep Kings in Sacramento

This literally just in, three minutes ago:

A source told the Bee today the NBA relocation committee has voted unanimously against the Kings proposed move to Seattle.

And:

If true, clearly this means the Kings are staying put, the Seattle group is SOL for the moment at least, and Kevin Johnson’s gamble on cobbling together an ownership group and arena plan good enough for the NBA to say “Fine, at least it won’t be our problem if it falls apart” was a success.

Discuss now, more tomorrow morning.


38 comments on “Multiple reports: NBA relocation committee votes unanimously to keep Kings in Sacramento

  1. Wow, I’m shocked that the vote was unanimous. I thought that Ballmer/Hansen had the edge. Now let’s see how this plays out in Sacramento- “Brother do you have $258M to lend us?”

  2. Sounds like Seattle will end up paying a giant expansion fee and their taxpayers will overpay for a new arena. Problem “solved.”

  3. The Sacramento term sheet is so poor, so lacking, that I wouldn’t be surprised at all if it all blew up at some point within the next 8-10 months.

  4. Boy, I sure can’t wait to see their reasoning. Unanimous? There wasn’t one team that didn’t prefer Ballmer over “cobbled together”?

    The only logical explanation I can speculate: They reached a backroom expansion deal.

    If this committee rejected the relocation 12-0, the BOG vote will be 30-0. For sure.

    And yes, Bob is right; this deal in Sac has about 6 potential failure points.

    I’m pretty confident that Hansen will get his down payment returned now, though.

  5. I wish the citizens of Sacramento luck with their arena endeavors. And I offer my condolences if/when there are shortfalls in the financing that they are expected to finance.

  6. David Aldridge has reported the NBA is placing huge pressure on the Maloofs to sell to the Sacramento group immediately, but I just got that feeling the Maloofs are yet again going to piss off the rest of the NBA. Stay tuned……..

  7. I could see expansion coming. Definitely not 2013-14, but a season or two after. Hansen will probably get his money back in a discounted expansion fee.

    Also, if the Ranadive offer is a “backup” and possibly not binding, who’s to say that they won’t lower the price? Will the Maloofs sell at a lower price or keep the team?

  8. I just get the feeling this non-refundable $30M isn’t as non-refundable as has been reported. Probably non-refundable if Hansen backed out, and that’s it.

    Just for spite, I would not be surprised if the Maloofs now refuse to sell.

  9. Nothing says the Maloofs can’t keep the team-only if they don’t make payroll. I think this story has reached a more unpredictable phase. The Maloofs maybe pressured to sell but why would they unless if they are severely financially distressed? The Sacto City Council now has to make real decisions- no more of this “moving forward” non-sense. It’s time to sign on the dotted line to borrow some money and figure out how to get some Downtown Plaza leaseholders some new space or some money.

  10. Yup, I’m really looking forward to the next George Maloof press conference.

    And make no mistake, I dislike George Maloof as much as the next fanatic. But within 2 weeks, they’ll announce an impasse, and announce that they’re keeping the team, in STA, because they love Sacramento, and think the DTP term sheets represent far too large a gamble for either Sacramento or the ownership group.

    Oh, and by the way, we want Hansen to have his 7% share.

  11. The other pressure point the NBA has with the Maloof’s is the money the teams has borrowed against the NBA credit line. How much they have borrowed is unknown but the liability exists.

  12. I don’t think this story is quite over for Sacramento just yet. Just this Seattle chapter- which may take a life of it’s own. This is just the beginning of just another chapter.

  13. Bob, my take on that is that the Maloofs entered into a contract to borrow money from the NBA, and that contract certainly has defined clauses as to when they can call in a loan. A lender can’t just call in loans when they feel like it.

    Unless, of course, it’s in the contract that they can. I just doubt there’s any such clause.

    Anyway, Mitch Levy was just on the phone with Steve Ballmer. His tweets are here:

    https://twitter.com/kjrmitch

    I fully expect the Seattle group to now play hardball. Rejecting them as owners will be costly to the NBA.

    Hansen should simply have done this the old-fashioned way: Say he loves Sacramento, and can’t wait to build an arena in our downtown. And then, 14 months later…

  14. Jason, just this part of the Seattle chapter is over. Hansen and Ballmer are not going to simply go away here.

  15. This is a Canuck saying this, but I really don’t understand why people are treating the deposit as “non-refundable”.

    Unless Hansen himself kills the deal, the Maloofs keeping the deposit would be unjust enrichment in any sane legal system.

    Same as if you go into a car dealer and they take a $500 deposit so that they can start the paperwork. If something happens, the dealer will probably drag their healds, but you’d get it back.

  16. Dennis: Unless the league has directed Hansen/Ballmer toward another franchise in play, I suspect you are right and that expansion will be announced sometime this summer. No doubt Hansen/Ballmer will get a bit of a discount on he exp fee for their trouble and patience with the Kings.

    MikeM: The owners used the looming Seattle threat (which was not insignificant, of course) to extract max dollars from Sacramento. As we’ve discussed in the past, the NBA BoG doesn’t have to choose between the two markets. They can get max dollars from Sac to hold the Kings and a healthy expansion fee from the Seattle group.

    It’s good to be “The King”, I guess, is the moral here.

  17. Sacramento group has been directed to make a deposit by this coming Friday.

    If they refuse to, I wonder if the relocation committee would change its mind. You would think they could.

    http://www.usatoday.com/story/sports/nba/2013/04/29/sacramento-seattle-supersonics-sonics-relocation-committee-future-move/2122013/

  18. It makes total sense. You ‘reward’ the city willing to hose its taxpayers (which is fundamental to the business model) and you up the potential taxpayer-hosing yet to come in Seattle. If Seattle wants a team, that expansion fee has to come out of somebody’s hide, and I’m betting on Not the Owners. Why not go after both sets of wanna-be owners (and their cities’ taxpayers)?

    Those who’ve pointed out that the arena deal will ‘fall apart’ in Sacramento are partly right: it will fall apart to the point where the city’s general fund will end up paying for it. Which is pretty much the plan, just as it is in most every one of these deals.

    Look for Sacramento to become the ‘Glendale AZ’ of the NBA. As Glendale has learned, it’s hard to hide the damage professional sports does when you’re a small city.

  19. I’m not sure that can work in a California city, though, Dave. To me, this has funding shortfalls written all over it. $447M to build there? Forget it. $212M for the parking? Forget it.

    No, the City will have to come up with about $100M, and soon. The only real way to do that will be with an election, and I think that’d fail.

    They can’t really do anything for a good 14 months here, if everything goes perfectly. And if the EIR comes back with $50M in mitigation costs, well, we’re up a creek again.

    There are still many twists and turns left in this road. I expect we will have to vote on a tax hike. I just hope this becomes apparent before we’ve knocked buildings over or sold parking bonds.

    A story came out in the Bee today where we’re now going to replace all our parking meters with solar-powered meters that take credit cards. I think one feature of these meters will be “flexible pricing”, as in “Event night at the arena, so it’s $10 to park here, sir.”

  20. $10 to park on event night would be a bargain compared to what some cities charge, Mike.

    It’s entirely possible that the Sacramento plan will fall apart or run afoul of any number of California laws or other regulation. It’s also possible that the Sac Whales will come up with a case of the shorts when it comes time to plunk down the deposit.

    I suppose what happens then depends alot on whether Sac has made binding commitments or just committed to do “something like” the plan it submitted…. but if they can’t meet the promises they’ve made for any reason, I would think that the NBA might reconsider the whole relocation issue.

    From where I sit it looks like the NBA still has two major fish on the hook for arenas and subsidies, and has likely pushed the Maloofs out the door as well (at some point in the next few months).

    #winning.

  21. The NBA has done this all wrong by voting on the relocation of the team in this fashion.

    The committee did not use rule of reason when they decided against relocation. By rule reason the committee must show the new city (Seattle) is less worthy for the league than the incumbent (Sacramento). They instead (like the NFL vs. Raiders or NBA vs. Clippers) think that they are one entity and can decide what ever “feels right”. No one can argue Sacramento is a better market than Seattle in terms of population, TV rights, and corporate sponsorships.

    The Clippers moved to San Diego and the Raiders moved to Los Angeles despite the owners voting down the move unanimously. Albeit in the 1980s but the NBA nor NFL have Anti-Trust exemptions and the recent American Needle Case vs. the NFL proved it again.

    The Maloofs and Hansen are going to sue the NBA big time. They decided against it in 2009 with the Anaheim move and they respected the NBA’s wishes and they went back to the well and found nothing with Kevin Johnson and Sacramento.

    Now the NBA shoots down the Maloofs again? This has lawsuit written all over it. The non-refundable deposit was just in case the NBA denied the Seattle bid….only explanation. Hansen-Ballmer cannot sue but the Maloofs can and will.

    On top of all of this the committee did not vote on the sale of the team in general to Hansen-Ballmer which is I believe is more grounds for a lawsuit.

    This was a bad move by the NBA and no one can force the Maloofs to sell to KJ’s group who has all the leverage in the world to drop that price way down from $550M. Which I think is another lawsuit in itself.

    The Maloofs have a deal and that needed to be voted on first…..this makes zero sense. Now if the Ranadive group matched letter for letter the Seattle offer then there will be no lawsuit.

    But if that was the case then they would have submitted a binding back up offer….Now watch this get messy as there is no binding offer from the Sac group. Wow…..the NBA has set themselves up for a messy future.

  22. $10 may not seem like a lot, but when you consider it’s free after 6 right now, that makes this a different story.

    Anyway, in the end, we’re going to find out why Sac “won”:

    We’re giving them over $300M; Seattle was planning to lend them $120M.

    Give vs Lend. It’s all about who presented the larger gift. And this will be a gift that keeps on giving for Sacramento.

  23. “Hansen should simply have done this the old-fashioned way: Say he loves Sacramento, and can’t wait to build an arena in our downtown. And then, 14 months later…”

    I’m sure he’s thinking that himself right now.

  24. Now, will the NBA find a logical reason to keep Hansen away from that 7%?

    They’re going to have to satisfy the bankruptcy court if they do; remember, they already pre-approved him to bid on that, and it just so happens that he won that auction.

  25. Can Sacramento do this with a phony funding plan, the way Minnesota did with e-pulltabs and bingo and pitching pennies in the back alley? I mean, you can pretend anything, you just have to keep up the pretense until the shovels are in the ground and the whole thing becomes “unstoppable.”

  26. It’s worth pointing out that the Maloofs have retained lawyers that specialize in anti-trust cases. That Ballmer conversation with Mitch Levy seemed very interesting. I wonder what Ballmer means by continuing communication with the NBA and David Stern. It’s become clear here that the NBA wants to keep up the racket of playing one city off against another and using Seattle the same way the NFL has used Los Angeles in the last 20 years- give us a building or we move your franchise to this big, beautiful, rich city. Unless if there’s something we don’t know about, it really sounds like the NBA still has some work to do to keep everybody happy (that is everybody except taxpayers). Again, we have not seen the end of this saga.

  27. Dave, there are multiple points of failure here:

    Can they really get $212M for the parking? I don’t think so.

    Will the EIR be rosy? I don’t think so.

    Can they really build there for $447M? I don’t think so.

    Can the NBA do more than strongly recommend the Maloofs sell to Ranadive? I don’t think so.

    Do the Maloofs have to sell at all? I don’t think so.

  28. I think it’s ironic, then, that Carmichael Dave got this right: It’s all about the size of the public gift. We had a larger one.

    Sickening.

  29. Yup, Sacramento is offering more public dollars but since we’re beyond the “non binding term sheet” phase, it’s time for Sacramento to put up or shut up and MikeM has pointed out all the hoops to getting the deal done. Also, I’m sure STOP and other arena opponents won’t go away quietly either. This is like winning an election. I could say KJ having that moment in that movie, The Candidate, when Robert Redford asks after winning, “What do we do now?”

  30. Jason:

    I would imagine (though guessing Ballmer’s mood or plan is fraught with pitfalls…) that he meant they’ll do just that… continue to talk to the NBA and express a wish to own a team in Seattle. Somehow someway. The buy/relocate gambit appears to have failed. But that is not the only iron in the fire.

    The fact that – at least at this point in time – Seattle isn’t getting the Kings is not the same as Seattle not getting back in the NBA.

    They still have an arena plan.
    They still have very deep pocketed investors.
    Their “obstacles” to arena construction are far fewer than Sacramento’s.

    There’s no reason at all that they can’t have a team. If Ballmer has retained an antitrust law firm, it may mean something… or it may just be leverage in the forthcoming expansion discussion (assuming Stern hasn’t ‘suggested’ they consider another franchise for relocation). I’m no where near as aggressive or accomplished as Ballmer. But in his shoes that’s just what I’d do…

  31. Errr… sorry, I misread your post into suggesting it was Ballmer who had hired antitrust specialists…. In regards to Maloof antics… I’d suggest that nothing they do should be considered ‘strategy’.

    They don’t have the equity they think they have. Their options are limited. The NBA will not allow Sacramento to step back from their existing commitments. At worst the NBA will have to guarantee that they won’t receive less – net – from the sale to the NBA’s preferred buyer than they would have gotten from Hansen/Ballmer.

    Sports franchises are not portable assets. The leagues do control the sale process.

  32. You know, I bet a lot of San Diego Clipper fans, a lot of Cleveland Browns fans, a lot of Baltimore Colt fans, and a lot of Oakland/LA Raider fans would contend the point that sports franchises are not portable.

    Yes they are. It’s just a matter of if you are willing to press the point.

    If the Kings snuck up to Seattle in the dark of night, and then told the NBA, “So sue us!”, they’d sue, alright. And lose.

    I don’t know if any NHL teams have snuck out of town in the dark of night, but I do know that MLB teams, because of the antitrust exemption, really can’t do this.

    The leagues can rewrite the “move bylaws” every day if they like, but I bet they can’t come up with a lawsuit-proof version of those bylaws.

  33. Hansen just put out a statement on sonicsarena.com. As the kids say, shit just got real.

  34. The decision to keep the Kings in Sacramento is the best decision. Now, here in Seattle, we can concentrate on having the Seattle City Council terminate the MOU. Hansen needed to pay for his own arena.

  35. Mike:

    When talking about franchise moves, we really need to draw a line at about the year 1990 (arguably, a little later).

    Prior to that, sports leagues operated a lot more like an affiliation of independent businesses. Their constitutions and bylaws reflected that. For the most part, the individual teams owned their trademarks and the like.

    That all changed in the mid 90s. The “new bylaws” as you put it have not been challenged in court as far as I know, but the leagues have spent a great deal of money on having the top legal firms in the country structure them so that they operate much more like a single business with multiple franchise outlets. In other words, Al Davis proved beyond reasonable doubt that “his” Raiders operated like an independent business and that it would be an unreasonable restriction on trade if he were forced to stay in Oakland. No NFL owner could do that today, given that each franchisee operates effectively at the discretion of the league.

    The NFL did not contest the Browns move (in no small part because it involved a destination city that was willing to throw money at the league and a source city that was not). They may or may not have been able to prevent it if they chose (I believe they could have).

    The Sacramento case is much different.
    The NBA might or might not “sue” if the Kings did the midnight move. They absolutely would impose crippling financial sanctions on the Maloofs (and any other owner of the Kings) if they did. If the present owners violate their franchise agreement (and these documents tend to be on the “tortuous” side), the NBA could simply revoke the franchise, conduct a sale itself and turn over any net proceeds to the Maloofs. Since the Maloofs are heavily indebted to the league as it is, the simplest act would be to trigger Debtor in Possession provisions to take the franchise over.

    As regards the NHL, the only recent comparable was the Coyotes “sale” through bankruptcy back to the league. Even with the added wildcard of a bankruptcy court who’s primary motivation was to obtain money for creditors, the league ended up back in control of the franchise (where, four years later, it still sits… to no-one’s surprise) – but they had to pay to get it.

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