NBA to Sacramento: Build an arena, or we could still move the Kings

Vivek Ranadive completed his purchase of the Sacramento Kings on Friday, and the NBA celebrated as only it knows how — by threatening to move the Kings anyway if a new arena isn’t built within the next four years:

Hours after Vivek Ranadive and his partners completed the record-setting purchase of the franchise from the Maloof family, NBA Commissioner David Stern revealed that the Ranadive group must meet “a series of benchmarks” for a new arena – or risk losing the Kings to another city.

If deadlines are blown, Stern told The Sacramento Bee, the NBA has the option of pulling the Kings out of Sacramento and arranging for the team’s sale to new owners.

It’s a bit of a bizarre notion, approving the sale of a team to new owners but reserving the right to unsell it if an arena deal doesn’t go through, but as we’ve been over time and time again, the NBA controls its franchises, and it can pretty much do what it wants with them. (Especially if Ranadive agreed to it in the sale agreement.) You have to hand it to David Stern & Co.: They’ve managed to play this whole Seattle-Sacramento battle for maximum leverage and profit, with the likelihood now that they’ll get two new arenas plus two sky-high franchise sales out of the bargain. (There’s already rumors of Seattle getting an expansion franchise by 2015, along with … Omaha?) It’s almost like they’re professionals at this!
What are the chances of the arena deal falling apart? Well, the campaign for a voter referendum on the financing plan has kicked into gear, though it faces an uphill battle getting the 33,000 needed signatures, and then of course Sacramento voters would need to vote to rescind the arena deal, too. While knowing that the NBA would likely yank their team if they do so.
And anyway, an arena will be great for Sacramento, because tech jobs! Because Ranadive runs a tech company, see, and his partner Paul Jacobs has promised to “bring as much technology as we can”! And that turns into jobs because, because… well, even the Sacramento Bee says that “what the group’s tech orientation means for Sacramento is uncertain,” but c’mon, tech jobs!

14 comments on “NBA to Sacramento: Build an arena, or we could still move the Kings

  1. Got to love David Stern. Pulls out the threat so to save his legacy if the Sacramento arena deal falls apart. But I’m sure the “deadlines” are well after he is gone, so if the league does follow through with its threat to move and re-sell the team to Hanson and Company, well there won’t be blood on David Stern’s hands. I must say, he is the master of public relations

  2. I’m sure the Bee loves this too. They’ll be able to keep the “The Kings could leave!”-meme alive for the next 4 years. That could be 3-4 articles a week.

  3. Will Ranadive be the savior the Sacramento makes him out to be or will he join the previous Kings owners who had to dump the franchise because they couldn’t afford to keep it up or couldn’t move it? There was a time that the Maloofs were Sacramento’s darlings. Also, will that purple RV come back? And the Bee does like the Kings drama- fire station, Coke bottling facility, and Campbell’s Soup factory closures ain’t all that interesting I guess.

  4. Neil, is there any precedent for teams bringing their owners’ main industries with them into some new town? If it was already there, that doesn’t count. I’m basically talking about, say, Ranadive sending out a notice to all his employees that within 2 years, they will relocate to Sacramento.

    I can’t remember an instance like that, but I’m also still looking for the keys to my Toyota.

  5. I remember at some point, Neil, you wondered how the Sonics could ever be profitable, with $625M going to the team, and $490M going to the arena.

    Now that we know the TV rights are worth way less in Sac, couldn’t you say the same thing about us? $535M for the team, $448M for the arena… I think I’d want an annual profit of $50M, or else I might just as well buy bonds and not get personally involved in a sports team.

    But they’re not going to clear $50M from this entire investment. Just curious, how much economic activity would have to be generated to clear $50M (remember, this would be clearing $50M after paying all expenses, including bond debt).

    I think there’s a realistic chance that about 3 years into ownership, Ranadive realizes that the only way to make that much is to spend as little as possible on the team end. If you can’t generate more revenues, you need to reduce expenses.

    Anyway, the NBA’s position here really removes a lot of the risk for Ranadive. There would be pressure for the NBA to refund the entire amount spent on the purchase. If the EIR comes back looking as ugly as I think it will, Would Ranadive then decide the spending has gotten out of hand, and take a hard position on mitigation, knowing that the City would then back out?

  6. “Neil, is there any precedent for teams bringing their owners’ main industries with them into some new town?”

    No.

    “Now that we know the TV rights are worth way less in Sac, couldn’t you say the same thing about us? $535M for the team, $448M for the arena… I think I’d want an annual profit of $50M, or else I might just as well buy bonds and not get personally involved in a sports team”

    Ranadive isn’t spending $448m on the arena, though.

  7. Lol. 3D replays being hinted at. I, for one, would not wear 3D glasses around a stadium while there’s a live game going on. But those holographic replay technologies have to be competing with the “Barlclay’s arena smell” for advanced technology to make for the most impressive arena to show off to your rich friends.

  8. Also, don’t forget that Ranadive will turn everyone in India into a Sacramento Kings fan. #यहाँ हम रहें

  9. Stern (or his successor) likely would not have to “unsell” the team to Ranadive’s group. Absent a new arena on terms more or less already agreed, does anyone think he’d “mind” being asked to move his club to a new free and high profit generating arena somewhere else?

    I mean he LOVES Sacramento, obviously… but I’m guessing not as much as he (and all the rest of us) love money…

  10. Have to assume that this is included in the sales agreement – and give somebody in the NBA offices credit for some serious forward-thinking. And if they’re already considering alternatives if/when the Sacramento arena deal falls apart, it’s not too far-fetched to think that Hansen & Company may already have a back-up agreement.

    Call it the “Vanessa Williams Clause”! “In the event that Miss America is unable to complete her duties…”

  11. 1) Isn’t this deadline basically the same thing as the rumored idea of Hansen/Ballmer trying to “pull a Bennett” and work in faith for a year to get an Arena deal done in Sacramento? Now they don’t need to run the team and if the deal falls apart in the next 12 months they can swoop in and get a team.

    2) For the person who questioned if Sacramento could swing the finances. Remember, Randive also promised not to accept any of the league revenue sharing. From my understanding, the extra cost (according to the people filing the lawsuit) is being offset by the City basically giving away land to the ownership group in various places around the City. I don’t think the lawsuit is going to work…it is really up to the citizens to open up their eyes and see the blatantly bad deal that this is for the City.

  12. You got to hand it to the Maloofs. They were able to find a greater fool who handed them a check for $200+M when there wasn’t any equity left in the franchise. So, this new gang of 35 team owners (general and limited partners) will presumably collectively put up cash and assume debt obligations totaling more than $600M for the team and arena to realize a projected a 1% annual return? Why are they doing this? Economically this makes no sense even considering future adjacent development. Do they all think they will see their profit on the back end with a higher team valuation down the road? Doubtful. This deal makes absolutely no financial sense to me.

  13. Mike M, my wife works for Ranadive’s company. Much as I’m not always delighted to live in Santa Clara, I’m sure not ready for a Sacto move myself…

  14. http://forums.realgm.com/boards/viewtopic.php?f=6&t=1253435

    NBA expansion talks I definitely see heating up soon. This is how Seattle gets a team again, especially once Adam Silver takes over in February.