Billionaire Ron Burkle and Bay Area investor Mark Mastrov are in serious discussions to team up on a bid to buy the Sacramento Kings and partner with the city of Sacramento on a plan to help finance a new downtown sports arena, The Bee has learned.
A source familiar with the negotiations told The Bee late Tuesday that Burkle and Mastrov are both committed to keeping the team in Sacramento and building the Kings into a contender. The teaming of Burkle and Mastrov is seen by city officials as a "dream team" counteroffer to the group that this week reached a deal with the Maloof family to buy the Kings and move the franchise to Seattle, the source said.
Burkle, who co-owns the NHL's Pittsburgh Penguins, recently has been mentioned by both Mayor Kevin Johnson and NBA Commissioner David Stern as a potential suitor for the Kings. Mastrov, the founder of the 24 Hour Fitness chain, made an unsuccessful bid to buy the Golden State Warriors in 2010 and until now had been the only person to publicly express interest in buying the Kings and keeping them here.
The news that Burkle was back in the hunt for the Kings, which he also offered to buy two years ago, capped an earlier announcement by Johnson on Tuesday that 20 prominent Sacramentans had agreed to invest $1 million apiece for a minority stake in the team.
Those local investors would partner with deep-pocketed financiers such as Burkle and Mastrov in making a counteroffer to the deal reached this week by an investor group seeking to move the Kings to Seattle. In an afternoon news conference, Johnson said ultrawealthy people with ties to California had expressed interest in buying the Kings, and that he hoped to unveil at least one as early as this week.
The purchase offer would be combined with a concrete plan to finance a new downtown sports arena when Johnson makes his pitch to reject the Seattle deal directly to the NBA's board of governors. Johnson will also argue that Sacramento is a more supportive NBA market than Seattle was when it was home to the SuperSonics.
Despite national media reports saying the NBA is inclined to approve the sale and relocation of the Kings, the mayor said he thinks Sacramento has a fighting chance.
"Come April or before, we're going to submit a fair and competitive offer," the mayor said, referring to the annual board of governors meeting held at the conclusion of the NBA's regular season.
The Maloof family, which has controlled the Kings since 1999, reached a binding agreement on Sunday to sell the team to a group led by Seattle hedge-fund manager Chris Hansen and Microsoft executive Steve Ballmer. If the sale is approved by the NBA, Hansen would move the Kings to Seattle before the start of the 2013-14 season and rename them the SuperSonics, after the franchise that left Seattle for Oklahoma City in 2008.
Johnson acknowledged he was playing catch-up to the Seattle group, which sources said has agreed to buy the 65 percent of the Kings owned by the Maloofs and their Oklahoma business partner, Bob Hernreich. The agreement values the Kings franchise at $525 million, meaning the Seattle group is willing to pay $341 million for the Maloof and Hernreich shares.
Burkle and Mastrov would give Sacramento an immediate boost. Forbes pegs Burkle's net worth at $3.1 billion, and Mastrov offered a reported $350 million in an unsuccessful bid to buy the Warriors in 2010.
A business associate of Burkle's could not be reached for comment. Mastrov also could not be reached.
"(The city has) legitimate individuals who are going to be treated very seriously by the league," said sports business consultant Andy Dolich, a former executive with the NBA's Memphis Grizzlies. "That is a good piece of news for Sacramento."
Sacramento developer Larry Kelley, who is one of the 20 local investors introduced earlier in the day by the mayor, reacted enthusiastically when told about the possible Burkle-Mastrov partnership.
"Sounds to me like it's a great marriage," said Kelley, who was a Kings limited partner in the 1990s. "They have money, they certainly have high integrity and a reputation for being very good businessmen."
Johnson's wealthy investors would be expected to cover the majority of the $341 million offered by the Hansen group. While the contribution of the local partners would make up a smaller share, Johnson said they would serve as a direct link between the Kings franchise and the community.
"These are folks who realize that the Kings are a civic asset for our community," he said.
Johnson said he began recruiting local investment partners on Thursday and that his initial goal was to secure between three and five willing to commit to $1 million each.
The list of locals includes downtown developer David Taylor, who had signed on to develop an arena in the railyard before a financing plan for that facility collapsed last year. Taylor has said he is also interested in reviving his role in an arena project.
"I wish the Maloofs good luck in the future," said Taylor, who has dealt with the family on several arena efforts. "While they have been a difficult partner in some instances, they've been a good partner in others. I wish them well, but I wish they'd sell to us, and I think they will."
Said another potential local investor, developer Phil Oates: "I'm doing this for one reason: It's time to fight."
Despite the seemingly long odds, Johnson said he was confident that his message would resonate with the NBA. At Stern's urging, arena operator AEG declared last week it's still committed to working on an arena project in Sacramento if the team stays.
"It is unprecedented for a team to relocate from a city that has done everything this community has done for 28 years," he said, referring to long sellout streaks for Kings games and a commitment by the City Council last year to contribute $255 million toward a new downtown arena. "We have been good partners."
Johnson also cautioned Seattle fans not to celebrate yet.
"We as a community, we've had the emotional roller coaster (of trying to keep the Kings); it's hard," the mayor said. "I would hate for them to be misled."