Naming of Kings arena hangs in the balance
12/22/2011 12:00 AM
12/25/2011 11:58 AM
The company buying bankrupt Power Balance LLC is talking with the Sacramento Kings about keeping the sports wristband marketer's name on the Kings' arena.
But there's no guarantee a deal will get done, and the strange naming-rights saga of Power Balance Pavilion remains unresolved just days before the start of the NBA regular season.
It's still possible the Power Balance name could disappear from the building.
A source close to the situation said Wednesday that Hanyang LLC, an obscure Southern California company that's set to buy Power Balance, is talking to the Kings "about a new type of lease." The source refused to be quoted by name because he wasn't authorized to discuss the matter.
Kings spokesman Chris Clark declined to comment. Officials with Hanyang couldn't be reached.
Terms of the current deal haven't been disclosed, although team co-owner Joe Maloof has said Power Balance would eventually pay more for the arena naming rights than its predecessor, Arco. The oil company reportedly paid the team $750,000 a year.
Little is known about Hanyang, except that its owner is married to the woman who owns a Hong Kong company called Contec Corp., according to court papers.
Contec is Power Balance's main supplier – and creditor. The firm is owed more than $6 million by Power Balance.
When Power Balance filed for Chapter 11 bankruptcy protection in November, just months after the company's name was plastered on the Sacramento arena, it added another complication to the Kings' future.
The team owners have said they'll leave town if Sacramento doesn't come up with a financial package for a new arena, although they seem lately to be relenting on a March deadline.
Power Balance, its reputation and finances ruined by consumer lawsuits and other woes, said it could run out of cash by Dec. 31. Its only possible lifeline was the sale of the business.
Court papers showed that Hanyang planned to sever the deal with the Kings once it bought Power Balance – a move it's legally entitled to make. But the source said Hanyang doesn't really intend to walk away from the Kings. Rather, it wants to see if new terms can be worked out, this source said.
Garrick Hollander, a lawyer for Power Balance, said he's been told Hanyang is in discussions with the Kings.
Hollander said Hanyang is expected to be approved as the buyer at a hearing today in U.S. Bankruptcy Court in Santa Ana. He said the company has sweetened its first offer and now plans to pay around $7 million for Power Balance.
An auction was set for Tuesday, but no other qualified bidders showed up, he said.
No matter what happens to the arena naming-rights deal, Power Balance's $100,000 debt to the Kings will still have to be resolved.
But it's not certain that the pending sale of Power Balance will generate enough cash to pay the Kings – or other creditors – in full.
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