The Seattle investors trying to buy the Sacramento Kings announced late Friday they have raised their offer for the team.
The announcement by hedge fund manager Chris Hansen came hours after Sacramento's investor group, trying to keep the team from leaving town, made it clear it would match Hansen's original offer to buy the team from the Maloof family.
Hansen said on his website Friday that he has increased his offer by $25 million, but there was some confusion about how much additional money the family would get for its 65 percent share. Hansen said his new offer raises the total value of the team by $25 million to $550 million.
That implies that the payout to the Maloofs would actually increase by $16 million to a total of $357 million.
Maloof spokesman Eric Rose confirmed the family had rewritten its agreement for the higher offer but declined additional comment.
Hansen's announcement, following hours of speculation that he might raise his bid, injects a tantalizing new dimension into a process that has grown crazier by the day. It also flies in the face of NBA Commissioner David Stern's statement in February that Sacramento only needed to match Hansen's offer if it wanted a chance at keeping the Kings. Stern said he didn't expect a bidding war.
Now he appears to have one.
Hansen said the higher bid is "a sign of our commitment to bring basketball back to our city."
On Twitter, Sacramento Mayor Kevin Johnson responded to the new Hansen bid, saying, "We, of course, are prepared to maintain the full-court press." He added, "We feel good about where we stand."
Hours earlier, a source close to the Sacramento bidders said they would equal the original bid the Maloofs accepted from Hansen in January. "We will be matching the Seattle offer," the source said.
A variety of sources have been sharing limited information in the days leading up to the NBA board of governors' meeting in New York next week, but given the delicate nature of the situation, none would speak publicly.
One source close to the situation said Friday that the Maloofs were still awaiting a formal purchase offer from the Sacramento group. This source said NBA officials were "trying to orchestrate a deal (with Sacramento's bidders) the league thinks will be acceptable to the Maloofs."
The source added that the Maloofs were considering extending their original 5 p.m. Friday deadline for getting a formal bid from Sacramento.
Another source with direct knowledge of the matter said meeting the Maloofs' deadline "is not an NBA requirement."
In any event, time appeared to be growing short for Sacramento to solidify its proposal. The source close to Sacramento's investors said they are in constant communication and are in the process of finalizing their bid.
The Sacramento group, led by software tycoon Vivek Ranadive, was also finalizing its bidder lineup Friday, as it unveiled the addition of Chris Kelly, a former Facebook Inc. senior executive who ran unsuccessfully for attorney general in 2010.
He joins a group that has grown to the point that one source said would-be big-money investors are now being turned away.
Kelly has been privately talking about joining the Kings bid for about two months, according to the source close to the Sacramento group. His name was mentioned by Sacramento officials during their presentation last week to a committee of NBA owners in New York.
"I am very excited to be a part of this once in a lifetime opportunity," he said on his Facebook page. "Buying the Kings is much bigger and more important than the purchase of a basketball team."
Along with Ranadive, head of Tibco Software of Palo Alto and part owner of the Golden State Warriors, the group also includes health club financier Mark Mastrov, prominent Sacramento developer Mark Friedman and the Jacobs family of San Diego, founders of Qualcomm Inc.
Johnson, posting on Twitter, hailed Kelly's emergence and said: "When we started this project I never imagined so many important leaders from across (California would) become a part of it." The mayor said he has known Kelly from his work in Democratic politics.
David Carter, a sports business expert at the University of Southern California, said Kelly adds strength to the team but could give NBA officials pause about the stability of Sacramento's group.
"It's a positive development, but it reinforces that the plan is not ironclad," Carter said.
Kelly's arrival is the third big change this week in the composition of the Sacramento owners' group.
Billionaire Ron Burkle, one of the original leaders of the group, withdrew Monday because of a conflict of interest, although he still plans to develop office space, retail space and a hotel in the portions of Downtown Plaza not taken up by the proposed new $448 million Kings arena.
A day later, officials announced Friedman, whose family owns Arden Fair mall, was joining the group.
The source associated with the Sacramento group says Ranadive has the money to buy out the Maloofs by himself, and the NBA recognizes it. But he wants to build a group with disparate strengths, and Kelly wasn't brought in solely for his wealth. Ranadive tweeted that Kelly is a "visionary leader in business and public policy." He also lauded Kelly's "deep knowledge of social and digital media."
City officials took the first legal step in making the proposed arena a reality Friday, releasing a "notice of preparation" to kick off the state-mandated environmental review. It could take a year. The city plans to contribute a $258 million subsidy to the arena.
Also Friday, bankruptcy trustee David Flemmer said David Lucchetti, a Kings limited partner, wasn't expected after all to match the Seattle group's bid for a 7 percent share of the team being auctioned in U.S. Bankruptcy Court. The Hansen group agreed to pay $15 million for the stake, and limited partners such as Lucchetti had the right to match the offer up until 12:01 a.m. today..
Lucchetti couldn't be reached for comment.
Hansen's purchase of the 7 percent share requires NBA approval, as does his plan to buy the Maloofs' interest.
In another development, a judge in Seattle dismissed a taxpayers' lawsuit challenging the financing for Seattle's proposed $490 million arena. The plan calls for a subsidy of $145 million if the Kings move and $200 million if Hansen can also attract an NHL team.
The lawsuit says the subsidy violates a voter-approved initiative that says public subsidies for sports stadiums must earn a profit for the city. King County Superior Judge Laura Gene Middaugh ruled that the city's deal with Hansen is tentative, so the lawsuit is premature.
Lawyers for the taxpayer group vowed to renew the legal fight once the arena financing deal is finalized.
Hansen's attorney, Jack McCullough, wouldn't say if he thought the ruling would influence the NBA's decision next week.
Experts say the league's vote will largely come down to which city has the more credible arena plan.