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July 04, 2012

Sacramento arena declared even deader than dead

In case you had any delusions that Sacramento Mayor Kevin Johnson's plan to build an arena with no team to play in it was anything more than a pipe dream, it's officially dead now:

The mayor says he asked AEG if it would consider duplicating what it did in Kansas City - investing in an arena without an anchor tenant.
The answer was no.
"They just say in this market, in this economy, they took a risk, in Kansas City and it panned out, but it's not a risk they'd like to take over and over again without an anchor tenant," the mayor said.

The big question now — okay, actually the big question ever since the Kings deal first fell apart back in April — is whether the Maloof family now intends to move the team (or sell it to someone else who will), or will have another go at working out an arena deal in Sacramento. It seems bizarre that they'd back away from a nearly completed deal at the last minute only to come back and resume negotiations, but then, they did this once before already. I don't think anyone can guess what the Maloofs are thinking at this point — possibly including the Maloofs.

COMMENTS

They may try and come back to work with the city again, but fat chance Sac will be helping the Maloofs going forward. As long as Kevin Johnson is mayor and the current council is in place there is no one dumb enough to try working with the three stooges again. Not after they looked a gift horse in the mouth and back stabbed their partners in the city and their fans. Nope, if a Kings arena is going to be built, it'll have to be under new Kings ownership.

Posted by Dan on July 4, 2012 09:18 PM

God, they are so lucky. I truly envy them.

Posted by santa clara jay on July 4, 2012 10:12 PM

I get the feeling that even the NBA is tiring of dealing with the Maloofs. It's hard not to wonder what might be going on behind the scenes that doesn't get reported...

Posted by John Bladen on July 5, 2012 10:20 AM

There's a lot going on in broad daylight that has been reported, such as the Maloofs completely losing control of their biggest investment, The Palms. They were at the league minimum for their players last year. They're deferring maintenance at the arena (it really is a mess; you have to see it first-hand to appreciate things like nails going through shoes, chain-link fences around certain areas, etc.).

They're so broke right now that not only can they not afford the $72M they were supposed to come up with, but they can't even afford to borrow the $72M. They wanted this arena paid for entirely by someone else -- because that's all they can afford.

They've figured out a way to make money; spend as little as possible on the team and arena, and be in the top 25% in ticket prices. Keep that going, and as long as they average 13,000+ in attendance, they can keep that going at a profit forever. I just can't imagine why people want that.

I still think Seattle makes sense after this season. Hansen and Ballmer will talk to the mayor and maybe the Council and tell them that contingency deals are coming together; the arena won't proceed without a team in-hand, and the purchase of a team won't proceed without certain progress towards an arena. The fact that Hansen has been closing land deals in Sodo is probably a barometer here.

$200M in Seattle involvement is too much, though. I'm not rooting for this deal any more; I'm just saying what I think can happen.

Posted by MikeM on July 5, 2012 12:06 PM

I forgot to point out another thing: If the City decides to build a competing facility, the remaining $67M balance on the 1997 "loan" is forgiven. That language is written broadly enough to where I bet any number of facilities could be interpreted as being a "competing facility."

Would a basic 12,000 seat arena with 15 suites be considered competing? I bet it would. As long as it can hold Disney shows, revivals, circuses, an NBA-DL team and concerts, I think the Maloofs would argue that the City built a competing facility.

That clause in the 1997 "loan" is among the dumbest clauses I've ever seen in a deal like this. It gave the team owners leverage forever.

Posted by MikeM on July 5, 2012 12:12 PM

Well unfortunately (or fortunately depending on your view), Seattle isn't happening as long as the Maloofs insist they're not selling. While the NBA may be tired of them, they also won't strip the team from them unless absolutely necessary. And while their running of the team may be bush league, the Maloofs haven't really given the NBA a reason to remove them. And even if they do change their minds and decide to sell their last asset of any value, there's no guarentee Hansen wins the sale. There is at least one Sacramento favoring investor in Ron Burkle who also wants the team. So it's not like a sale is a slam dunk for Hansen either. And then there's the Samueli issue in Anaheim where he's gone forward with the renovation of Honda Center to make it "NBA ready" and his interest in having the team there has also not waned (nor has the local LA press' interest either). So there are at least 3 different scenarios that could play out. Which means if nothing else next spring will be interesting for the Sacramento Kings.

Posted by Dan on July 5, 2012 12:33 PM

Dan, when the whole Burkle thing came up, me, being of sound geek mind, decided to size up Burkle and Ballmer.

It's not even close. Ballmer can buy out Burkle if he feels like it. I don't know why he would feel like it, but he could.

Seriously, it's like 10-1. It's that big a difference. These aren't comparable billionaires.

These lists of 200 richest people in the world are all over the place. Ballmer is in the top 5; Burkle is somewhere around 100, if I remember correctly. The point being, if Ballmer and Hansen are truly motivated to do this, then they're not going to let Burkle outbid them by $10M. Burkle will have to go all-out; Ballmer will have to, in effect, throw in another ten bucks.

Hey, how about this Coliseum City proposal from Oakland?

www.sfgate.com/raiders/tafur/article/Oakland-tries-to-retain-A-s-Warriors-Raiders-3683181.php#page-1

Posted by MikeM on July 5, 2012 04:14 PM

Coliseum City was and is nothing but a political ploy by the mayor of Oakland to try and escape blame for the loss of one or more of the teams from the city. It remains an overly expensive, overly ambitious and totally unrealistic proposal that will never happen.

Posted by Dan on July 5, 2012 05:43 PM

The Maloofs are waiting for someone to rescue them on their terms. The arena deal wasn't the rescue they are looking for. That rescue involves relocating- to Seattle or Vancouver. They want to own the team in those places but I'm thinking the most likely solution is that a buyer comes in with a lot of $$$ and buys them out.

Posted by jjo916 on July 6, 2012 02:29 PM

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