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April 16, 2012
Sacramento Kings deal blows up so spectacularly that people in Stockton are still wiping bits of it off them
If you thought the Sacramento Kings arena deal was falling apart last week, you hadn't seen falling apart. Starting on Friday morning:
- Kings co-owner George Maloof gave what one report called a "disjointed" hour-long press conference in New York in which he attacked Sacramento Mayor Kevin Johnson, insisted "there was never a deal," and even floated, "Why don't we look at redoing Power Balance? It's less money, less pressure on everybody. We already have the infrastructure, the parking. It's all there, and the cost to the city would be a lot less."
- Mayor Johnson, after meeting for two hours with the Maloofs, declared the arena deal "dead", in particular because the team owners were refusing to put up any collateral on a renegotiation of the team's existing loan from the city. (The current collateral is the Kings' arena, which would be demolished under the new plan.) Asked about the possibility of renovations instead, Johnson said only, "When I sat down with the Maloofs...they very clearly told me they didn't want to renovate Arco, now Power Balance Pavilion. They said they wanted a brand new facility. They wanted to be the toast of the town. ... If they choose to renovate [Power Balance] on their own and use private dollars, that's certainly their prerogative."
- NBA Commissioner David Stern issued a carefully worded statement in which he defended both the city ("It's not going to happen, but I can say the city has stepped up") and the Maloofs, though the latter included a backhanded dig at the owners for putting him through years of negotiations before pulling the plug at the last minute: "It was always nonbinding. And I think it's fair for the Maloofs to say they don't want to do that. If they had done that a little simpler, a littler earlier, and a little more directly, it could have saved a lot of angst and trouble." Asked about the possibility that the team will now move, Stern said, "I know we're scheduling them into Power Balance Pavilion for next year. It just wouldn't pay for me to talk anything beyond that."
- On Saturday, George Maloof declared that he'd be willing to resume negotiations — but not with Johnson: "I don't think I'd want to negotiate with the mayor. Maybe there's someone else that I'd feel more comfortable with. We're disappointed in comments made by the mayor that we feel were shots to us that were unfair and not truthful."
- On Sunday, the leader of Johnson's Think Big Sacramento arena task force, Chris Lehane, told USA Today that "dealing with the Maloofs is like dealing with the North Koreans -- except they are less competent." Lehane also told ESPN that the Maloofs were just "looking for ways to blow up the deal," and added that it's the Maloofs who need to go, not the mayor or the Kings: "In Maloof-world, facts are fiction; truths are half-truths; and promises are broken promises. The City of Sacramento deserves better."
- Joe Maloof, not to be left out, told the Sacramento Bee yesterday that "we feel like criminals, and we didn't do anything wrong," and said the team would still be open to looking at new arena deals in Sacramento. "Everyone just needs to calm down. We all need to cool off," he said.
In the wake of the Kingspocalypse, we're likely to see tons of speculation about the team moving to Anaheim or Seattle, though each of those cities has the same problems that they did when they were proposed earlier (the need for big territorial rights payments to the Los Angeles Lakers and Clippers, and an as-yet-unproven financing plan, respectively). And it's not altogether clear whether Stern and the NBA are going to be quick to approve a move when the Maloofs had a deal on the table — albeit a deal held together with spit and baling wire — and then trashed it at the last minute.
The most truly remarkable thing from the whole weekend, though, just might be this snippet from Sacramento Bee columnist Ailene Voisin's interview with Joe Maloof, discussing the possibility of relocation and the last-second proposal to renovate Power Balance Pavilion:
What about the need for a modern arena to provide the additional revenue streams that appeal to sponsors and partners? That's all anyone has heard for more than a decade. Now none of that matters?
Things have changed. The new collective bargaining agreement has revenue sharing that helps out small markets like us, San Antonio, Portland, Utah. That's huge, huge for us. We didn't have that before.
So, wait, now the Kings don't need the revenues from a new arena? Does this mean that we can just go back to having the Kings play in their old (actually only 24 years old, if you must count) arena, and all pretend that the last few years were just a dream?
OK, Sacramento: it's time to Think Big, as it were. What would it be like to renovate old Arco Arena, with some proper development around it? What would that take? Surely not as much trouble or expense as building anew, especially now that the NBA owners can't get behind a move without embarrassing themselves, and the Maloofs themselves admit they don't need a completely new building to stay afloat. What's to lose?
Posted by Anderson on April 16, 2012 10:54 AM
Well, for starters, $255MM in public funding. There's no way in heaven or hell or anywhere in between that the Maloofs will get public dollar number one for any assistance with a reno of Arco/PowerBalance. So that means that any reno of Arco will have to come from their pocket.
And as we all know from history, sports franchise owners are far less likely to spend their own money for arenas when other Guvmintal agencies are willing to do so on their behalf (*cough*Anaheim*cough*).
The only thing keeping the Kings in Sacramento is the fact that the Maloofs have so pissed off the rest of the NBA owners with their recent act that they will not be permitted to move, but especially not to their preferred destination (Anaheim).
And oh by the way, word's come out in the local press that days after the handshake deal-that-was-not-a-deal, George Maloof was talking with Anaheim. Nice.
Posted by SierraSpartan on April 16, 2012 11:29 AM
"...it could have saved a lot of angst and trouble."
"...it's not altogether clear whether Stern and the NBA are going to be quick to approve a move..."
If there's one thing we've learned over the past 28 years, it's that it's not a good idea to cause David Stern "angst and trouble" if you're in any way involved in the NBA.
Posted by Keith on April 16, 2012 11:48 AM
I was going to say that "The only possible conclusion to this is...", but that's not really true. No point in resorting to hyperbole. Har.
By far, the most likely conclusion is that the Maloofs don't want to be in Sacramento. They feel the franchise is worth more in Seattle or Anaheim than it is in Sacramento.
The biggest mistake the Council made was approving non-binding term sheets. I hope they never do that again. They should only consider approving or rejecting an actual contract. Technically, the Maloofs are correct here -- they never had a binding agreement. That the City was willing to fork over $6.5M in hopes to get to a contract showed how dumb they were.
I think if Burkle was really interested in buying the Kings, that would already have been done.
Also, the deal in the non-binding term sheets were just entirely too generous (but not generous for the Maloofs, as it turned out). This started out as a 1/3-1/3-1/3 proposal with a regional approach, and ended up being 80% City with only extremely minimal regional participation (the County was going to provide some parking). Maybe if they had stuck to that original idea, it had a chance, but I still don't see what was in it for Placer County.
Now we're going to see a huge dropoff in sponsorships and season ticket sales, and the Maloofs don't seem to have the resources to weather that storm.
Also, I tell you, all these sides -- KJ, Think Big, LeHane, the Maloofs -- are choosing their words very poorly. All of them are saying things they'll regret later. I mean, North Korea? Really? Anyone needed to go there? Pardon my language, but WTF?
When is the last time a team applied to move and was rejected? Once this market abandons the Kings economically, the Maloofs will apply, and they will not be rejected. And I think they have wording in place that can enable this for next year. It depends on how the Maloofs pursue this.
Anyway, not that I have many thoughts, but those are mine. Everyone get out there and enjoy this great weather.
Posted by MikeM on April 16, 2012 11:56 AM
"When is the last time a team applied to move and was rejected?"
That's tough to say, as typically a team doesn't even apply to move unless they know they have the votes to back it up. (Cf. Sacramento Kings to Anaheim, last year.)
I think SierraSpartan's assessment is correct that the Maloofs just squandered any NBA willingness to let them be the third team in the SoCal market. Seattle would probably fly - Stern has as much as said he'll welcome back Seattle with open arms the minute they build an arena without NBA money - but that's assuming that the Seattle arena finances pencil out, which is a big if.
If I had to lay odds on how this all ends, I'd say maybe 3:2 that the Maloofs are unable to find a viable relocation target and ultimately sell the team, 2:1 that they move to Seattle, 7:1 that they go to Anaheim with heavy territorial rights fees, and the field dispersed across various lesser likelihoods (moving to Las Vegas or Kansas City, the Maloofs and KJ burying the hatchet and coming up with a new deal in Sacramento, etc.).
Posted by Neil deMause on April 16, 2012 12:23 PM
The last time I can recall an NBA team trying to move and having it rejected was when a group headed by Bob Arum and a bunch of other sketchy boxing people wanted to buy the Timberwolves and move them to New Orleans back in the mid-90's. Stern blocked the sale, and the team stayed in Minneapolis under new ownership.
Posted by discochris on April 16, 2012 12:59 PM
Here's the horrible/beautiful irony in all of this: If the Kings remain at Arco, then they will probably become one of the most profitable teams in the NBA, due to revenue sharing. They were one of seven teams to make a profit last year, and they stand to make a pretty good profit this year as well.
All they need to do is to keep building expenses low (no new building, very little renovation, make minimal payments on existing loan to city), keep staffing low (NBA is still handling season tickets and promotions), and keep salaries low (Kings have the lowest payroll in the league, lowest for three of the last four seasons).
They're gonna take the Donald Sterling approach and put a unique Maloofian spin on it, and we here in Sacramento get to go along for the ride.
Good times.
Posted by SierraSpartan on April 16, 2012 01:04 PM
My favorite nugget from the Joe Maloof interview, other than the "We're not criminals, poor poor us" part was when he stated they have "tremendous personal wealth, Wells Fargo stock." Kings fans better hope WFC stock doesn't go down the toilet, or, poof, there goes their tremendous personal wealth. It gives one the impression that their entire income is derived from Wells Fargo dividends, their 2% stake (wow!) in the Palms, and Kings profits. That's good money if you can get it, but for an NBA team owner they have to be rather poor.
I agree with SierraSpartan, their best bet may be to just play Donald Sterling for the next few years. It won't be fun for Kings fan, though.
Posted by Justin on April 16, 2012 01:18 PM
SacTownRoyalty has a pretty good post on the 16 points the Maloofs still wanted to negotiate.
Basically, the Maloofs wanted to take a great deal (for them, at least) and make it even better. Of the 16 points on the list, I don't see how the City would have moved much (if at all). No collateral on the new $67M loan probably wouldn't even be viable in the bond market.
www.sactownroyalty.com/2012/4/16/2951451/the-inescapable-paradox-of-the-maloofs-arena-stance
The Maloofs really did make a good point: That deal was too risky for the City. So, here's an idea; let's make it even riskier. That'll help.
IF the Maloofs stay, we're going to get a profitable franchise that will have a poor customer experience and a team that wins 20-30 games a year. As soon as contracts get too large, they'll just let players go. Enjoy Cousins while you have him, I guess.
The Council approving something other than a contract was so dumb. They did kind of set themselves up for this.
Posted by MikeM on April 16, 2012 01:22 PM
There are a couple of things that are not being mentioned in the comments section that I wanted to add. I heard Ric Bucher from ESPN here locally in Seattle on Friday, who mentioned that he is hearing �Vancouver� actually makes the most sense for Maloofs. Here are the reasons working against Seattle and Anaheim.
Seattle: If kings come to Seattle it means that Maloofs would have SOLD the team to Chris Hansen, which the Maloofs do not want to do. There is no way on earth Hansen would allow the Maloofs to keep control of the team. I do not expect you guys to know all the details since here in Seattle we are constantly exposed to his comments on this matter. But essentially he is doing this whole arena thing because, at least according to him, it has been his dream to OWN an NBA team, not have somebody else own it and become a tenant in his arena. Although his proposal does look pretty good (relatively speaking) and there is a high probability that it gets approved in June, I have yet to hear anything publicly from Stern that shows that he is even remotely interested in bringing NBA back to Seattle.
Anaheim: Reasons have already been mentioned above. Lakers and Clippers would try to block the move and rest of the owners don�t really want Maloofs to have Anaheim after what they did to Sacramento. That doesn�t mean Maloofs won�t end up there but it will be very difficult.
Vancouver: this option provides the Maloofs a win-win. Vancouver has a readymade arena where the Canucks play, there are no territorial rights issues, it�s a great market, and best of all for Maloofs, they get to KEEP their team. How does this not make the most sense?
At this point, I think the two most likely things are either 1) Maloofs are forced to sell the team to someone who will keep the team in Sacramento, or 2) they pack up and go to Vancouver. I would place Seattle 3 and Anaheim 4.
I would encourage Bobby to Google "Vancouver Grizzlies" and get back to us with any further thoughts on his post.
Posted by SierraSpartan on April 16, 2012 02:26 PM
With the Hornets off the market and no other NBA teams for sell, I believe by the end of the year the Maloof Family will put the team up for sell to any buyer whether they keep the team in Sacramento or move them elsewhere. I just don't see them being able to stick around with all the crap they've been putting everyone through.
Posted by NFL in LA on April 16, 2012 03:09 PM
NFL in LA, if the Maloofs have to/choose to sell the Kings, they won't give a darn where it plays. At that point, you'd be looking at "highest bidder." If that means Sacramento, San Jose, Louisville, KC, Anaheim, Seattle or Vancouver, the Maloofs simply won't care.
Not their property any more.
If I sell you my beautiful vintage Ferrari and you want to turn it into a dune buggy, I'm pretty sure I can't stop you.
Posted by MikeM on April 16, 2012 03:35 PM
Or you could just go the Maloof route, and make an agreement to sell the Ferrari, but then demand that you retain the rights to any future color it's painted, to have first rights for any days that it isn't being driven, and for the new owner to pay any parking and/or traffic tickets that you may incur on days that you were using said Ferrari.
Posted by SierraSpartan on April 16, 2012 05:08 PM
In which case you wouldn't buy the Ferrari. You'd be a fool to.
The letter Chris LeHane sent out is pretty amazing. Talk about going over-the-top with rage. I don't think he's helping his cause at all.
sportsillustrated.cnn.com/2012/writers/sam_amick/04/16/thing.big.sacramento.kings/
The divorce papers haven't been filled out yet, but you can bet they will be. Looks unstoppable to me.
Posted by MikeM on April 16, 2012 06:46 PM
Maloof's = York Family Ownership of the SF 49ers.
Posted by truth be told on April 17, 2012 01:15 AM
Neil - this is your funniest headline to date.
"Sacramento Kings deal blows up so spectacularly that people in Stockton are still wiping bits of it off them"
Posted by SantaClaraTaxpayer on April 17, 2012 10:57 AM
Gawd, I'm so jealous of a city that has the wheels come off of its deal. Why couldn't we had been so lucky down here?
Posted by santa clara jay on April 18, 2012 12:27 AM
Ridiculously enough, KJ is now suggesting that Sac should build a smaller ESC at the same location, and proceed with the parking concession. Even though building any competition to PBP would cancel the existing 1997 lease agreement for PBP.
Yes KJ really is that stupid. Need more proof of that? Not me.
Posted by MikeM on April 18, 2012 12:48 AM