NBA votes 22-8 to keep Kings in Sacramento, will figure out who owns them later

David Stern is talking right now about the NBA’s decision on the fate of the Sacramento Kings, which you could be watching here right now if the stream hadn’t just crashed. Instead, let’s let Chris Daniels of KING-TV take it away:

So it sounds like: The NBA rejected the move, as has been long expected, and is effectively rejecting (for now, anyway) the sale of the team, too. And because the Maloofs don’t want to sell to the Sacramento buyers, it means nobody’s buying the team for the moment.

Basically, then, the “everybody is unhappy” scenario from this post. There will be much, much more once the Stern press conference is over, I’m sure — and then probably much, much more tomorrow, and then even more next week and the week after that and OH GOD I’M NEVER GOING TO BE ABLE TO STOP WRITING ABOUT THE SACRAMENTO KINGS EVER EVER AM I?

[UPDATE: The press conference is now streaming properly at KIRO-TV's site.]


47 comments on “NBA votes 22-8 to keep Kings in Sacramento, will figure out who owns them later

  1. You might as well spin off kingscourtofschemes.com and monetize it with google adwords links to sonicsarena.com

  2. Apparently, rejecting the move also rejected the sale. Would this be wrapped up in the construction of the PSA?

    It’s pretty lame when Stern says the needed something more concrete from Seattle. I mean, WHAT? How could it have been more concrete? Do they need actual concrete?

  3. Sac Town cannot build this arena without bankrupting the city. Seattle stay ready.

  4. Yeah, if I was Hansen, I’d proceed as if the relocation had been accepted today. Sacramento’s plan is going to hit snags; enough to kill it, I believe.

    If Hansen simply proceeds, right up to the point where ground is about to be broken, he’ll be considered option 1 when Sac falls apart.

    The Maloofs’ next move will be interesting. I think they’ll play hardball, because they have more assets than some believe they do.

  5. This isn’t the 1st time the nba has rejected a higher bid in favor of a team staying. Ironically, Larry Ellison offered $50M more for the Sonics than Clay Bennett and his group but was rejected because he made it clear he was moving the team to San Jose. Clay Bennett committed to working with Seattle for 3-years which we all know was now a sham. I don’t see Hansen and Ballmer involved going forward. If things don’t work out in Scto down the road then I could see relocation creep in again but I would expect that Sacto will survive the fire drill and donate $300M to get this done.

  6. Re: MikeM – I’d assume that the Seattle arena deal just got a lot shakier. There was plenty of motivated opposition what with the Mariners and all and Stern & company handed them a metric ton of ammunition.

  7. Sacramento’s long municipal nightmare now becomes Neil’s long nightmare. Seattle and Sacramento got played like a fiddle.

  8. The Sacramento Kings get to live one more year. Is this staying alive as in avoiding euthanasia or staying alive and being healthy by avoiding a near death experience?

  9. This would be a great opportunity for Ellison to step in and pledge his full support to keeping the Kings in Sacramento.

    If you catch my drift.

  10. You know, Jason, we could be all wrong about this. Maybe the Maloofs now say, “We’ll have our deal done with Ranadive by COB Friday.”

    It really could happen. I will not say that’s impossible.

  11. Ending the Maloof chapter would be good for just about everybody. But they will be missed- there was a certain panache in their unpredictable hilarity.

  12. I just read reports that the NBA is going to start negotiations on the next major TV deal (meaning starting the ABC vs NBC vs CBS vs Fox bidding war), with the plan being to complete it in late 2014. It’s possible that the NBA might discuss expansion/value of current markets, and if those networks offer to up their deals if the NBA expands or moves a team from a weaker market to Seattle, they will then work with the Seattle group. However, that means that any talk with Seattle is at least 1 year away, so if Hansen/Ballmer want to get a major sports team, they should start talking with the NHL about buying a team and moving it to Seattle.
    Also, Stan makes a good point: could this kill the Seattle arena deal? All the plans to stop it died because it seemed like a sure thing to get a team. But if fucking Sacramento could keep a team, who says anyone else could move? Barring Sacramento’s plans crashing and burning, and the NBA’s best option being reopening negotations with Hansen/Ballmer (which is insanely unlikely), we might never see a team become available for a long, long time, which might destroy the plans even before the 2017 deadline.

  13. Larry is done with stern and co. after 3 unsuccessful attempts to buy a nba team and move it to SJ- instead he bought an island in HI and is focused on racing his yacht.

    No matter what anyone says you got to give it to KJ- against all odds he pulled this off

  14. Ryan: The Seattle arena deal is clear that nothing gets built without an NBA team. NHL doesn’t count.

  15. Well, I don’t want to get anyone’s hopes up… but this has played out according to plan (at least today).

    Personally, I hope the Maloofs do refuse to sell to the Sac Whales. Then, after the league has awarded an expansion franchise to Hansen/Ballmer, and arena construction is underway, the Sacramento arena plan can collapse, leaving the Maloof clown show with “much less” to try and sell to some other sucker. So go ahead, dipsticks, refuse to sell to Ranadive now. My bet is you’ll get less money in two years when the arena deal is in pieces (not that it isn’t already).

    If I’m Chris Hansen today, I’m smiling. I will get my expansion team (100% of it, shared w his OG, not the Kings legacy owners) for almost exactly what I was going to pay for 70% of the Kings. And David Stern still likes me a whole lot (Hansen, not me…).

    Sure, maybe I have to wait an extra year (I was surprised the suggestion was made that it could be in 2015… I assumed it would be 2016 at the earliest), but I also get 30% more team for my money, and don’t have to deal with the legacy of incompetent ownership from the Maloofs.

    # winning

  16. Hansen released a statement:
    While we are obviously extremely disappointed with today’s relocation vote and truly believe we put forth both a significantly better offer and Arena plan, we do thank the league and the owners for their time and consideration and look forward to hearing back on our agreement to join the Maloofs as Limited Partners in the Kings.
    But most of all I would like to thank everyone in Seattle who has been a part of our effort and supported our cause. Words simply can’t express how much your support has meant to me personally and to our City. I truly believe we did everything possible to put our best foot forward in this process and you all should be proud and hold your heads high today.
    Our day will come…and when it does it will just be that much sweeter for the struggle.
    I love you Seattle!
    —Chris Hansen

    Seems to me like he’s taking the high road (in public), while also keeping the Seattle fans thinking positive, which is a very smart move all across the board. Will likely help a lot in getting an expansion team someday in the future.

  17. Neil, you will be writing about the Sacramento Kings for a while. Regardless of how this shakes out, the NBA would like it to end with some kind of an arena built somewhere. Sacramento got to keep its team. We all know that $258+ million in subsidies did the trick. No we’ll see who get’s the Kings and if the city finds the money to go with its promises and if things like voters or courts get in the way.

  18. And… the Seattle Arena Tag will live on as a perennial relocation threat for another 4.5 years.

    Just when you thought the US was working to end subsidies and local government bodies were in a cash crunch…. the sports empire keeps demanding more.

    http://www.npr.org/blogs/money/2013/05/03/180912847/episode-224-the-cotton-wars
    I was listening to the Planet Money episode about US Cotton subsidies the other day… $1.3 B in cotton subsidies in the US a year and to appease Brazil’s WTO claim against the US for providing the subsidy, they decided to just extend the subsidy and pay a set $150 M a year to Brazil’s cotton farmers. Crazy solution.

  19. I talked to my dad tonight, and I think he made 3 really good points
    1. The reason why they wanted the Sacramento group to win and the Seattle group to lose is because the Seattle group would have paid vastly (and he really means vastly) more for an expansion team than the Sacramento group, which would be making the other 29 owners way more than they would have with a Sac expansion + Kings moving fee. Plus, this means they are guaranteed a new arena with a very pro-NBA lease in Sac, so in the end by doing this they would get 2 bitching new arenas, and a ton of money from both the expansion fee, not to mention national tv rights. Everyone in the NBA wins (except the Maloofs, but who gives a damn about them)
    2. For all the arguments about how “the NBA owners won’t expand”, we gotta forget they were dumb enough to over-expand in the 70s, and over-expand again in the 90s. Who is saying they won’t be dumb enough to do it again for the right dollar in the 10s?
    3. The NFL isn’t seen as a total villian for what its done with LA for we’ve never seen a stadium come close and there is no true LA group willing to pay a lot for a team, so they can always say “Hey, not our fault” with what happens (even if it is); the NBA does with Seattle because of how they left, how close an arena is to being built now and the fact there is an ownership group willing to pay top dollar. They will likely put someone there because they want the negative publicity to end and the positive publicity to come, especially once the deadline nears in 2017.

    I don’t know if he will be right, but considering his experiences in his 35 years of being a businessman, I trust his judgement and thought process, and know damn well he could be right on this. However, only time will tell……

  20. So who gets the NBA team 32 assuming seattle is 31? New Jersey but that brings in 3 teams to NYC area, not sure if it would fly. I guess KC might work but small market with 2 other pro teams. Maybe go with Vancouver.

  21. The NBA doesn’t have all teams playing at once like the NFL or MLB, so they don’t need an even number of teams. They had 29 for years before the Bobcats were conjured into existence.

  22. I don’t want to take any consolation hope away from seattle but expansion is far down on the NBA good ideas list. They need small market fans to have aspirations and dreams of teams filling already built arenas. To keep that dream alive you do need to have cases where small markets can step up big and win (by giving big to the NBA ) against seemingly more desire able markets. Once owners no longer had revenue sharing concerns sac had this.

  23. Small markets means big subsidies. Small markets means smaller business communities and a smaller customer base. Sacramento kept the Kings because the big subsidies brought the whales and their bids and the NBA around, because they remembered what happened in Seattle a couple of years back.

    But what this is is another example of how government on a national, state, and local level has lost its way. Despite study after study about the ineffectiveness of many business subsidies, policymakers enabled by the business community support and push these subsidies. Arenas and sports stadia are not public goods particularly when the US needs trillions of dollars of infrastructure repair.

    And Kevin Johnson represents the worst of the Democratic Party- pushing this type of irrational and risky expenditure plus his work in so called education “reform.”

  24. Of course I am more confident in that statement Thursday morning rather than Wednesday morning. The league has far more complete models of financial data but I am still not convinced they saw Seattle as the revenue sharing contributor that some expected. Larger market I get but Hansen took on a lot of arena costs.

  25. The reason I think the expansion talk is premature is simply this: There are multiple opportunities for the Sacramento arena plan to come flying apart.

    The EIR will supposedly be done in June of 2014. As I’ve noted before, the freeway access in that area is already terrible, and I cannot see a cheap, fast fix for that. If they really are going to have 200 events/year there, they will be forced to address that issue.

    Like I said, redirecting traffic to 10th and 15th/16th will not work. All those cars idling away in traffic for an additional 2 hours per event will not be taken lightly.

    That’s one issue. There are more.

  26. ChefJoe: It’s all in the TV contract, which they said would be 80% larger than Sac’s. The TV ratings for Kings games is awful; we already know the 49ers, Giants and Raiders outdraw the Kings on local TV, all by huge margins.

    That’s why the Dodgers ridiculous purchase price really wasn’t that crazy.

    I think the current owners of the Giants got a bargain, too. Even without two WS wins in 3 years, that is a very valuable franchise; it has to be worth more than twice what the Kings are.

    I don’t even want to think about what the 49ers are worth. “More than I have” is a safe bet.

  27. mp34, I get your point, but at some stage of this process, they’re going to realize that between a shortfall from the parking bond sale, missed estimates on the arena costs and excessive EIR mitigation costs, they’re going to have to sell additional bonds to cover a $150M gap.

    Even with this Council, that won’t be an easy sell.

  28. Technical question: Who determines the dollar value of the bonds against the parking? Is it some bond-rating agency, or a private company (hopefully not Goldman Sachs; we know how they’ll rule — and then buy all of them), or City officials?

  29. Oh yes, if Sacramento thought Hansen and Ballmer were “billionaire bullies” I can’t to hear what Sacramento will think of Goldman Sachs.

  30. MikeM. Since when has revenue projections errors stopped a league and council approved arena? Edmonton/Minnesota/every other arena disagree.

  31. Yeah, that’s not a good thing, ChefJoe.

    I’m asking, What is that property worth? They expect a certain ROI from an investment, and if the City says some investment will give a return of $X for 35 years, then “someone” says, “This asset is worth $Y, based on the value of X”.

    It seems like a pretty simple formula to me. If you know you’re going to make $100M over 10 years, then some property is probably worth about $40M (plus or minus).

  32. What about the 7% share Hansen won in BK court?

    Since the NBA pre-approved exactly one party to bid on that, and that guy won, if the NBA now rejects Hansen for that 7%, won’t the BK court be well within its rights to demand to know why they subsequently rejected Hansen?

    I still don’t think this is completely over. It could be, though, if the Maloofs arranged for Ranadive to pay double for the 7% what Hansen was going to pay (with Hansen receiving some sort of payout for his work — consider it a finder’s fee).

  33. Couldn’t agree more with Jason’s comment regarding our mayor. Can’t wait to vote on this. Also, the fact that the Kings just might have the worst pair of broadcasters in professional sports, Grant Napear and Jerry Reynolds, has to have at least something to do with their terrible TV ratings. (Hawk Harrelson is bad, but he’s just one guy, right?)

  34. I am glad the vote was taken at the BOG meeting. Now, we in Seattle can get back to ending the Hansen/Ballmer tax sucking welfare arena proposal. Good luck in Sacramento ending your tax sucking welfare arena proposal.

    We need Mayor’s to start an Alliance of Municipalities. This would be a group of cities, which contractually agree with each other that they will not subsidize professional sports facilities. This Alliance could also ban poaching of business by Alliance cities from Alliance cities. Wealthy interests playing one city against the other to gain subsidy for the wealthy interests would be hampered by something like an Alliance.

  35. The next year for the NBA is let’s take a look at the TV market for our games and see if Sacramento could actually get a shovel in the ground. In other words, Seattle still has two avenues to getting a team. The NBA will see which one will work.

  36. MikeM:
    Here’s what I’d like to know. How do the new Sacramento investors make any money on this deal of buying the team and building an arena. Here’s my napkin analysis:

    1) Purchase of majority ownership = $341M
    2) Minimum arena contribution = $200M
    3) Assume cost overruns = $100M
    Total Investment = $641M

    Now let’s assume team and arena income equals $120M/yr and we deduct the forfeited subsidy of $20M/yr so the net revenues are $100M. Team salaries are $60M and operating expenses probably total $30M for a net profit and cashflow of $10M/yr. Let’s keep further downtown redevelopment out of this equation. So, if the new investors own 65% of the team and get arena revenues then they will realize 65% of the $10M/yr in net cashflow or $6.5M/yr on a $641M investment. That equals a 1% ROI/yr. This might be acceptable to these “whales” if they expected to realize a profit on the eventual increased value of the team but at a $525M valuation, any increase will take years to be realized.

    So, granted this is all speculation, but I just don’t see why the investment group sees this as a profitable investment.

  37. The Maloofs paid 156 million for the Kings in 1999, and are selling it for more than double that 14 years later. Thats all we really need to know in terms of profitable investment.

  38. Does anyone know the name of the 8 owners that voted yes to relocate the team? Cuz as a Seattle fan I need to know who to support!

  39. Maloofs officially agreed to the deal; it came for 348 million, a little higher than the original Ranadive bid; for now, this all seems over.
    In addition, my previous post was wrong. They actually only paid a little over 100 million for the Kings, it’s just the valuation went to 156 million. So in the end they ended up making more than triple what they paid for in 1999, not double. So I guess that’s all we really need to know in terms of profitable investments.

  40. The Maloofs took everybody to the bank. Perhaps the Maloofs were the smartest people in the room, the entire time. Kind of like the old guy who turns out to be the mastermind after everyone else is dead in the movie “The Wild Bunch”; or Kevin Spacey’s character in “The Usual Suspects”. Maybe the Maloofs started and dispensed the nickname Magoofs, so that those of much lesser intellect would be taken off-guard by the Maloofs’ genius.

    Anyway this sale to the Ranadive Group puts the nail in the coffin (thankfully) to the the months long circus that was the Kings sale issue.

    New issue now the arena in Sacramento. The Maloofs are off to train the CIA.