NBA: Sacramento Kings Will Stay Put, Re-Location To Seattle Denied By NBA
NBA.com’s David Aldridge on the Kings staying in Sacramento after the NBA Board of Governors meeting denies Seattle:
Sacramento pulled it off.
Capping an unprecedented rally to keep its team, the city convinced the NBA’s Board of Governors to reject the potential move of the Kings to Seattle for next season. In a 22-8 vote, the full Board voted against ratifying the $625 million sale of the team to a Seattle-based group led by hedge fund manager Chris Hansen, meaning the Kings will remain in California’s capital city for the foreseeable future.
NBA Commissioner David Stern said he hoped to convince the Kings’ current owners, the Maloof family, to enter into a sales agreement within the next 48 hours with a group led by software magnate Vivek Ranadive that would keep the team in Sacramento, and that has committed to building a $447 million arena in the city’s downtown area.
Sources have maintained for months that the Maloofs did not want to sell to a Sacramento-based group, preferring to do the deal with Hansen, with whom the Maloofs had reached agreement in January on a sale of the team for a franchise valuation of $525 million — taking 65 percent of the team for $341 million. But Stern said in an afternoon news conference he anticipated convincing the family to sell to Ranadive’s group, whose lawyers have been in contact with the Maloof family’s lawyers for several weeks in case the Hansen deal was rejected.
“I won’t say anything other than I anticipate that they will come to be open,” Stern said, “and I plan to visit with them and close, hopefully, on that anticipation.”
About an hour later, Ranadive, flanked by Sacramento Mayor Kevin Johnson and local developer Mark Friedman, indicated they were also hopeful to close a deal with the Maloofs soon. They also announced that swimwear giant Raj Bhathal was taking a larger role in Sacramento’s investment group, and that the Ranadive group put into escrow the entire $341 million required to match the Hansen group’s initial purchase price.
“We all know this is an emotional situation for [the Maloof] family,” Johnson said. “They have given their heart and soul to Sacramento and to basketball … some of the best days of this historic organization, our franchise, have been under the Maloofs’ leadership. We realize that. So for them, I’m sure there’s mixed emotions.”
George Maloof said after the vote that he would first talk with his family and with Hansen before deciding whether to go forward with completing the sale with the Ranadive group. He insisted that he did not feel the league was pressuring him in any way to sell to Ranadive.
“If it had to turn out this way, it’s fine with us,” George Maloof said. “But my loyalty’s with Chris, because he stepped up. We tried to find somebody that would buy the team in Sacramento. And we couldn’t. That’s the fact of the matter…the Mayor did a great job, put a great team together. We’ll see what happens. It’s not over. We’ll just see what happens.”
Maloof said Hansen was “very disappointed” with the league’s decision.
“We’re all disappointed, because we worked so hard on it for so long,” Maloof said.
Hansen released a statement on his arena website late Wednesday, saying he believed his group put forth “both a significantly better offer and Arena plan,” and indicated he still hoped to become a limited partner with the Maloofs.
“But most of all I would like to thank everyone in Seattle who has been a part of our effort and supported our cause,” Hansen said in the statement. “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.”
The vote of the entire board backed up the 7-0 vote April 29 by the league’s relocation committee to reject the move of the Kings to Seattle.
George Maloof said he still held out hope that he could include Hansen in some kind of fashion in a deal, though it seems extremely unlikely the league would approve Hansen as a minority partner, given his stated desire to move the team to Seattle. That would seem to eliminate a potential “secondary” plan that Hansen and the Maloofs presented to the league last week that would have sold 20 percent of the team to Hansen for $120 million, on a franchise valuation of $600 million.
But the $625 million offer died Wednesday.
“That agreement’s over,” George Maloof said. “There are other possibilities.”
But Stern made it clear his intention was for the Maloofs to sell outright to the Ranadive group.
With the Maloofs “having really forcefully projected support for the Seattle bid till the end, the owners listened, they voted,” Stern said. “And now, we think, that because the Maloofs have overall been very good for Sacramento and the Kings and the NBA, that they will be motivated to do something fast so that the franchise can get cranking, and we can hold the Mayor to his promises of support by ticket sales, season ticket sales, naming rights and sponsorships.”
Ranadive said he spoke briefly with the Maloofs — brothers Gavin and Joe Maloof were in attendance along with George — before the decision was announced. “I fully expect we’ll be able to work with them,” he said.
Seattle Seahawks CEO Peter McLoughlin, who represented Portland TrailBlazers owner Paul Allen at the meeting, said afterward that the Blazers were one of the eight teams that voted in favor of the relocation. But those eight votes were only half of the 16 that were needed to approve the move.
“With Paul’s ownership of the Seahawks and the (Major League Soccer) Sounders, and the fact that he lives in Seattle, and his relationship with Steve Ballmer, it was important for him to be supportive of Seattle — as he always has been,” McLoughlin said. “He’s always been wanting the NBA to return to Seattle, and always said it was a sad day when the NBA left.”
When the initial deal between the Maloofs and the Hansen group was announced Jan. 9, there was little doubt anywhere around the league that the Kings would move to Seattle next season. The Hansen group, backed by billions between Hansen and Ballmer and Nordstrom Store executive Peter Nordstrom, was an exceptionally strong group with solid financing, and which had already acquired the land on which it wanted to build a $490 million area in Seattle’s South of Downtown (SoDo) section.
It had agreement from Seattle’s City Council to provide up to $200 million in public financing (which was contingent both on getting the Kings, and a potential NHL team). And it had an agreement with the owners of the team.
But Sacramento was able to do in months what it had taken Seattle two years to put together.
The city’s initial major investors were 24-Hour Fitness founder Mark Mastrov and supermarket magnate Ron Burkle, along with 25 other local investors who each pledged $1 million in corporate contributions. But the group soon morphed into a new one. Burkle got out of the team and arena deals after a potential conflict of interest was unearthed during the vetting process.
And Ranadive, a minority investor in the Warriors, who would be the first majority owner of Indian descent, along with the Jacobs family, which runs the communications giant Qualcomm, stepped into more prominent roles. Each brought significant additional credibility to the Sacramento bid.
“We have this concept in Silicon Valley — we call it ‘smart money,'” Ranadive said. “You have money from many places. But I’ve always wanted to surround myself with people who are way smarter than me. So we actually have taken some new money. We’ve reduced some people so that we could take in some new money.”
Johnson and his political allies were able to quickly get a term sheet approved that would provide $258 million in public money toward construction of a new building to replace rapidly aging Sleep Train Arena, on the site of a mall that was eyed for redevelopment by several out of town investors, who had been involved in other major development projects in California, including Treasure Island in the Bay Area.
“Looking back with hindsight, nobody really thought that the property could be acquired, that the second site could be acquired, that the money could be put into escrow, all kinds of things,” Stern said, “or that the size and strength of the group that ultimately emerged in Sacramento would likely emerge. So kudos to Vivek Ranadive, and actually to all of the owners that were here…it was advantage, incumbent. Nobody had any doubt that the same, or similar, thing could happen in Seattle. It was just, do you give the edge to a city that has a 28-year history of support?”
Of course, Seattle supported the SuperSonics for 41 years before the franchise was moved by Oklahoma City in 2008 by Clay Bennett, who bought the team from Starbucks chairman Howard Schultz in 2006. The next two years were a nightmare, with Bennett insisting he was trying to make an arena deal to keep the team in town, despite e-mails that were unearthed later between Bennett and his partners that seemed to indicate they were eager to leave Seattle and go to Oklahoma City.
Seattle fans blamed Bennett and Stern, who had indicated the team needed to get public funding in order to get an arena deal, but had been rebuffed by the Washington State legislature. The league did not accept a last-minute bid from Ballmer in which he would have spent $300 million of his own money to refurbish Key Arena, where the team played, and approved the move.
Stern said Wednesday that he hoped it would be possible to keep the political and business support together in Seattle for a future potential franchise.
“I think they’ll act as they always have, in their best interest,” Stern said. “And I believe that at such time as there is a franchise available under NBA procedures and rules, or through expansion, and that conversation takes place, that the right forces will be in place in Seattle to achieve that result.”
After it became apparent the Sacramento group would be able to match the initial $525 million valuation, the Hansen group upped the ante, raising its valuation to $550 million, then $625 million, meaning it would pay $406.25 million for the 65 percent share of the team it originally bought. In addition, Hansen’s group announced it would offer an unprecedented $115 million in relocation fees to NBA owners if they approved the sale — approximately $4 million per team.
Stern and deputy commissioner Adam Silver went out of their way to praise the strength of the Seattle presentation, promising “fair dealing and thorough consideration down the road” for that city — though Stern said flatly that the league had nothing it could offer Seattle at the moment in terms of a promise or commitment to bringing a team there in the future.
He reiterated that the league could potentially look at expansion as a solution but that such discussions would only take place after the league completes its next television agreements with broadcast and cable networks.
“I think there was a generalized talk that it would be good in the future to consider that [expansion] issue,” Stern said, “but awaiting the next television renegotiation, which is virtually upon us — measured in terms of a year or so, what have you — that it was best to await that event.”
The Hansen group has continually made it clear it is not interested in pursuing potential litigation to force the NBA to allow it to buy the Kings. University of New Hampshire law professor Michael McCann said last week that he believed it would be difficult for the Hansen group to win any type of antitrust lawsuit against the league, given that the league’s constitution gives it the right to approve any deal for a team, and that owners sign waivers that prohibit them from suing other owners while they own NBA teams.
Posted on May 16, 2013, in NBA and tagged David Stern, Kevin Johnson, Sacramento Kings. Bookmark the permalink. Comments Off on NBA: Sacramento Kings Will Stay Put, Re-Location To Seattle Denied By NBA.