With reports swirling that the Kings’ move to Seattle is a mere formality at this point, the story on the ground in Sacramento is much, much different.
In the end, this story comes down to three things:
1. Can Seattle’s Chris Hansen close a deal with the Maloofs to buy the Kings? (According to reports, it was first and goal at the one-yard line about a week ago)
2. Can Kevin Johnson secure the opportunity to meet or beat that offer?
3. What will the NBA’s Board of Governors decide to do?
As we reported in September, in order for Seattle to be able to beat Sacramento’s offer financially they would have to drastically overpay for the team. This is because Sacramento owners do not have to worry about the Maloofs’ loan to the city, relocation fees, or moving costs.
The offer in Seattle has been reported to be $525 million based on the overall valuation of the franchise, so Sacramento can pay $425-$450 million based on the overall valuation of the franchise and still end up providing more money to the Maloofs than Seattle can.
With sources speaking to PBT on the condition of anonymity saying Sacramento has multiple buyers that meet both the city and NBA’s criteria for owning a franchise, the pertinent question has been whether or not David Stern and the other owners would allow Sacramento to present their offer.
We got that confirmation today at the State of Downtown Sacramento Breakfast when mayor Johnson announced that Stern had indeed approved Sacramento’s request to speak at the Board of Governors meeting in April.
This is an extremely significant development in this story. First, it displays the trust that has grown between Stern and Johnson, as well as between Stern and the city of Sacramento, who has met every deliverable that has been asked of them in the Maloof debacle.
Second, it shows that Stern and the other owners are willing to let this relocation issue play out at a more visible level. If they had no intention of giving Sacramento a chance, then it would be a curious decision to give the critical voices blasting the NBA for its relocation practices the oxygen to continue bashing them.
Indeed, the city of Sacramento has presented a “model offer of public funds” according to one league source, and for a complete rundown of what a decision to move the team from Sacramento would look like, you can check out previous write-ups about the NBA’s billion dollar subsidy industry and how that plays into the league’s decision-making here.
In short, the league has leveraged cities into providing $3 billion of public money since 1990 for the creation of state-of-the-art arenas – all predicated on the assumption that a long-term partnership would be honored so long as both parties are acting in reasonable good faith.
If Sacramento has done everything it can to keep their team, a fact that is not in dispute, then leaving them at the altar because the Maloof family ran their own finances into the ground is going to be a major problem the next time they go to ask a city for money.
Most importantly, with sources close to the situation confident that they will have an actionable offer that will reasonably meet or beat the amount of money that Hansen can put into the Maloofs’ pockets -- assuming he and partner/Microsoft CEO Steve Ballmer don’t turn into the drunk guys at an auction -- then Stern and the other owners are going to have to make an unprecedented decision to move the team out of Sacramento.
Not only would a Sacramento offer likely break the NBA record purchase price of a franchise, and include an actionable plan to build a brand new arena with a league vetted public-private partnership, but a decision to move the team would mark the first time a mid-market city had been poached for a larger market when the original city had everything the league could ever ask for in place at the time of the move.
Looking at the Maloof side of the equation, they are both driving this discussion but are also operating at an extremely weakened position in this debacle. Owing as much as $200 million by various reports and facing a financial crisis of their own (they just made a cash call to minority investors according to NBA.com’s David Aldridge), it would be a shocking move if they did not sell the team at this stage of the game.
Furthermore, both the family and the NBA could be in for a messy breakup should Sacramento not be given a fair chance to buy the team.
Any lawsuit filed by the city to stall the deal for what legal sources say could be any number of criteria relating to the improper moving of the franchise, including but not limited to union workers’ rights and the lack of a local bidding process, would necessarily put the Maloofs into a lame duck season in Sacramento.
When considering the Maloofs’ messy financial situation and considering the league’s likely desire not to get into a protracted battle over the Kings, all signs point to Sacramento getting a chance to present their offer with everybody at the table willing to vote their way should the deal points pan out as Sacramento sources say they will.
For all of the talk about the Maloofs not wanting to sell to a Sacramento buyer, and confirming Sam Amick’s must-read report about the situation, the talk of Ron Burkle appears to be overstated at this point.
There are sources in Sacramento that believe he could still be a party to these talks, but that the KJ camp is not relying on any one white knight at this time. It has been reported here and elsewhere that the Maloofs don’t want to sell to him because of their dislike for the billionaire, who they believe ruined their chances to move to Anaheim in March of 2011.
The reality here is that they are going to have to fall in line with what the NBA’s BOG decides or face the prospect of a lame duck season going heads up against both the NBA and Sacramento, and in their financial situation that is a non-starter according to most sources with knowledge of the situation.
These sources aren’t going to predict what the Maloofs will try to do, but most believe that the family will take a financially favorable offer in Sacramento and also that if the league decides to back Sacramento in a relatively close deal that they family will back down and take the offer.
With the decision to have Kevin Johnson out to the BOG meetings already made, the focus of this story shifts to the work at hand for Sacramento. They have to get their ownership group finalized and ready for presentation.
Those following the situation should not be surprised if a deal is announced in Seattle, but like the San Francisco Giants’ eventually blocked sale to Tampa Bay in August of 1992 this will be decided by the owners once Johnson’s deal is finalized should Hansen come to an agreement with the Maloofs.
And for those handicapping the action, Kevin Johnson is not going to make that presentation without having owners in place that meet the shared criteria of both his camp and the NBA office. He will come boasting a ravenous No. 20 television marketplace with some advantages and disadvantages compared to Seattle, but nobody will deny Sacramento’s appetite for NBA basketball.
In 24 hours since announcing their grassroots effort, Here We Buy has received pledges totaling nearly $10 million from local individuals and businesses toward season tickets under the new ownership group.
Johnson will come armed with the ability to force the Maloofs into a lame duck season if he has to, but mostly he will arrive at that meeting with yet another stirring example of his city stepping up with all odds against it.
The images of the Sign Lady, Carmichael Dave on a ladder telling crying Kings fans that ‘this is not over by a long shot,’ and the 600-1000 arena workers that are going to lose their jobs are not going to be lost on the proceedings, and for the owners without tear ducts in their eyes they will look at the financial risk of a decision against Sacramento side by side to the incremental benefit of a very qualified Seattle offer.
That decision to rip out Sacramento’s heart is all risk and marginal gain, assuming Kevin Johnson has one more career-defining slam dunk left in him.
And since he hasn’t missed a shot yet, it seems silly to bet that he’s going to fall apart in the fourth quarter.