The National Basketball Association announced a tentative labor agreement Saturday that would end a bitter five-month lockout and provide a critical financial boost to the Sacramento Kings and other struggling small-market teams.

If owners and players ratify the agreement, basketball games could begin Christmas day, officials said, nearly two months late. The league hopes to salvage 66 games of an 82-game season.

The Kings' first scheduled game after that date is Monday, Dec. 26 at home against Philadelphia. The NBA is expected to revise its schedules, however, in the coming days. Three Dec. 25 games on the schedule – Boston Celtics at New York Knicks, Miami Heat at Dallas Mavericks and Chicago Bulls at Los Angeles Lakers – would remain.

"The tentative agreement is great news for our fans, players and our organization," Kings spokesman Chris Clark said. "We are very hopeful the NBA will be back on the court on Christmas Day."

NBA Deputy Commissioner Adam Silver said the new deal creates more financial parity, helping small-market cities like Sacramento compete.

"We feel ultimately it will give fans in every community hope that their team can compete for championships," Silver said, "and that their basis for believing in their team will be a function of management of that team rather than … how deep the owner's pockets are or how large the market is."

The surprise handshake deal was struck early Saturday after a 15-hour negotiating session in New York.

It came two weeks after talks had seemingly broken down, prompting players to sue the league and causing NBA Commissioner David Stern to warn of a "nuclear winter."

Several steps remain before the lockout formally ends. Players must agree to withdraw their lawsuit, and the disbanded players union must be reformed to allow for a majority vote on the deal. The league's 30 owners also must vote majority approval.

NBA watchers point out some deal details have not yet been agreed upon, and could be tripping points.

NBA officials said they hope the votes can be taken in coming days, allowing the league and fans to finally focus on basketball.

The tentative deal reduces players' share of league basketball revenues from 57 percent to somewhere in the 49 to 51 percent range over the length of a new contract, which is expected to be a 10-year deal, with an opt-out clause for both sides at six years.

The deal reportedly also would help small market teams compete for free agent players by increasing the "luxury tax" imposed on wealthier teams that exceed the league's flexible spending cap on player salaries.

An upcoming revenue-sharing plan among teams is also expected to direct more pooled money to smaller market teams.

The potential resolution comes at a key moment for Sacramento Mayor Kevin Johnson's effort to finance a downtown arena to replace aging Power Balance Pavilion and persuade Kings owners to keep the team in Sacramento beyond this season.

The Kings were on the verge of moving to Anaheim earlier this year until Johnson's efforts and a groundswell of support in Sacramento prompted them to back off.

The NBA and Kings have given Sacramento until March 1, 2012, to put an arena financing deal together or risk seeing the Kings move.

Johnson and the City Council on Dec. 13 are expected to discuss whether the city can contract to have a private company run the city's downtown parking operations in exchange for upfront cash to jump-start arena financing.

The mayor, a former NBA star, expressed pleasure with the news out of New York Saturday. He said a deal will revive jobs in Sacramento. The Kings group employs 700 workers, 550 of them part-time. That doesn't include concessionaires for outside contractors.

"If the proposed deal is ratified … that is great news for the NBA, great news for the fans and great news for cities such as Sacramento whose economy is being impacted by the lockout," the mayor said in an email. "With regards to the arena, our position from day one is that this has never been about building a facility to benefit a professional sports team."

Johnson said his arena push is based on bringing more jobs and revenues to the local economy. But Michael Ault of the Downtown Sacramento Partnership said the news "is good for the efforts to keep the Kings in Sacramento."

"This (arena) is about more than the Kings, (but) let's not kid ourselves, the Kings are an important tenant in this building," he said. "They're an important part of the identity of this community."

NBA labor contract expert Larry Coon of UC Irvine said he thinks the deal could be key to keeping the Kings in Sacramento. "I figure if the season was canceled, the Kings staying in Sacramento would have been toast. It would have been too much of a hit on the Maloofs."

But David Carter, a sports-business expert at University of Southern California, said the new deal won't completely erase the huge gap between markets.

"It's important at least on the surface to have many teams in the league with a semblance of a chance to make the playoffs," Carter said. "If you don't have a system that makes these teams on the upper end think twice about spending on free agents, you've got a problem.

"If you are the owner of a small or medium-market team and you have a chance to make it to the second round of the playoffs, that will help your bottom line."

Lon Hatamiya, a Davis economic consultant who's studied the impact of NBA teams on cities, said resumption of play should help the local economy.

Kaylani McLeod, a manager at Bella Bru restaurant in Natomas, said area businesses dreaded facing a season without Sacramento Kings basketball.

"Gas stations, restaurants, people who sell athletic wear, it's like a small community here," she said. "Anytime you take something away, it's taking a lot from our town."

Consultant Hatamiya said that he wonders, however, how quickly fans will return. "I hope the prolonged negotiations don't hinder the attendance and people's enthusiasm for the Kings."

The news drew instant cheers from Kings fans, many of whom have been on the edge of their seats for weeks as the clock ticked on what could be the team's last season in Sacramento.

Sacramento Kings fan Blake Ellington, who blogs at bleedblackandpurple.com, called the news a payoff for fans who worked on the "Here We Stay" campaign to keep the team in Sacramento. "It's exciting to know the fans around here are going to get to have that 'here we stay' (first) game."

Ellington said he and others will mobilize fans to attend the Dec. 13 City Council hearing.

© Copyright The Sacramento Bee. All rights reserved.

Call The Bee's Tony Bizjak, (916) 321-1059.