Kings mired in a Maloofs-vs.-Sacramento stalemate
05/01/2012 12:00 AM
05/01/2012 9:14 AM
Sacramento and its Kings are locked in a stalemate that could take months – or years – to resolve.
With the downtown arena project dying yet again Friday, the team is stuck at aging, inadequate Power Balance Pavilion for the time being.
While the Kings say they want to stay in Sacramento, city officials believe a move is possible. But an attempt to relocate could encounter resistance from the NBA, which is disenchanted with the Kings' owners, the Maloofs.
Sacramento is boxed in, too. Mayor Kevin Johnson wants to pursue a downtown arena without the Kings. But he faces financial challenges and a legal hurdle: Under the fine print, the Kings could likely walk away from their $67 million debt to the city if Sacramento built a competing arena.
Bottom line: The city and the team are stuck in an unhappy marriage.
"I think impasse is where you're at," said Andy Dolich, a Bay Area sports consultant and former executive with the NBA's Memphis Grizzlies.
Of course, that could change. Kings co-owner George Maloof said the family is committed to "getting something done," but both sides need a break from arena talk.
He again raised the possibility of renovating Power Balance.
"That's still a viable option," he said Friday.
But a retrofit is unlikely without the city's help – which the mayor ruled out. Johnson said redoing the Natomas building wouldn't generate a big economic boost the way a downtown arena might.
The NBA, which was ready to help with the new arena, says it won't assist with a renovation, either.
At the heart of the impasse is the Maloofs' finances, which took a hit during the recession. The team is $205 million in debt, according to sources familiar with the situation, and has limped along with the NBA's lowest player payroll two years in a row.
The Kings' financial constraints appear to be keeping them at Power Balance, even though they've pushed for a new arena for years. The city and NBA believe the Maloofs are wary of taking on the debt needed to finance their share of the downtown arena.
Among other things, Johnson said the Maloofs wouldn't pledge "adequate" collateral to refinance the city's existing loan. The debt must be refinanced if the Kings move to a new arena.
"Whether they couldn't do it or not, I just don't know," the mayor said when asked about the collateral.
George Maloof disputed that assertion and said the family had already put up enough collateral. He wouldn't go into detail and criticized Johnson for talking about it.
"We had a gentleman's agreement that we weren't going to discuss the issues in public," he said Friday.
City officials would love to see the Maloofs sell the Kings to someone richer. But the family says its finances are healthier than outsiders realize.
NBA Commissioner David Stern said last week that he wouldn't try to force a sale.
With the loss of the Palms Casino in Las Vegas to creditors last summer, the Maloofs' fortune consists mainly of their majority share in the Kings and $330 million in Wells Fargo stock. Forbes magazine says the team is worth $300 million.
Essentially, the Maloofs are plenty rich – except by the standards of modern NBA owners, a group increasingly dominated by billionaires.
To finance their $73 million share of the downtown arena, the Kings would have depended completely on the NBA. The league was going to arrange a $67 million loan and donate the rest.
With that deal dead, the Kings might be looking for the exits. Yet those exits may well be blocked.
The easiest deal for the Maloofs financially may lie in Anaheim, where the Kings were poised to move last spring, assisted by a $75 million loan from the billionaire who runs Anaheim's arena.
Another attempt to consummate that move would meet resistance from the Los Angeles Lakers and Clippers, like last year. Another potential suitor – Seattle – wants a team, but a deal for an NBA-worthy arena is "months and years" away, Dolich said.
A year ago, Stern said the NBA would support relocation if there was no arena deal by now. But he's now refusing to speculate what the league will do.
The Kings "are not, in my opinion, going anyplace anytime soon," Dolich said.
The Kings could sue the NBA if they're kept from moving, and they pointedly brought an antitrust lawyer to the owners' meetings in April.
History says it isn't clear if the NBA could keep the Kings from moving.
The NFL's Oakland Raiders in 1982 won a famous antitrust case to move to Los Angeles. In 1984, the Clippers left San Diego without even seeking the NBA's approval.
On the other hand, the NBA kept the Minnesota Timberwolves from moving to New Orleans in 1994.
"It's a case-by-case, fact-specific" situation, said Matt Mitten, a sports-law expert at Marquette University.
There's only one thing for certain at this point: Because the league's relocation deadline has passed, the Kings will play at Power Balance Pavilion for at least one more year.
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