Sacramento Kings sale reports are premature, say sources
01/10/2013 12:00 AM
09/23/2013 8:09 AM
After saying for years they would never sell their basketball team, members of the Maloof family now appear close to unloading the Sacramento Kings to an out-of-town group for what could be a record price.
Sources told The Bee on Wednesday that the family has been talking with a deep-pocketed Seattle investment group about a sale and team move to that city. One report pegged the sales price at an NBA record of $500 million or more.
But, during a whipsaw day of Internet rumors about a possible secret sale, two sources with knowledge of the situation adamantly told The Bee no deal is done and no formal offer has been made.
Sacramento Mayor Kevin Johnson reacted late in the day, holding a news conference to say he is trying to recruit local buyers for the Kings.
"For the first time, they have publicly shown the desire to sell the team," he said of the Maloofs.
He declined to identify potential local bidders, but said he has been hearing from people since plans for a new arena downtown fell apart last spring. "I heard from a number of people who said, 'If the team was ever for sale, let us know.' "
For now, though, Sacramento finds itself again on the sidelines, similar to its position two years ago when news broke that the Maloofs were planning to move the team to Anaheim. That deal eventually fell through after the NBA persuaded the Maloofs to keep the team in Sacramento for another year.
One source, who declined to be named because he is not authorized to speak on the matter, told The Bee that discussions between the Kings and Seattle financier Chris Hansen are only "conceptual" at this point.
Another source characterized media reports Wednesday of a potential sale as "premature," and said the Seattle group has not made a formal offer.
Still, the news reflects a dramatic shift by the Maloof family. The team's two most active owners, Joe and Gavin Maloof, previously said they would never repeat the mistake their family made in 1982 when it sold the Houston Rockets.
Faced with a tough financial picture in their 13th season as Kings owners, the family has crossed an emotional threshold, sources said.
"If someone was to put a crazy number on the table, their perspective could change," said a source with connections to the team. "If somebody like a Hansen were to actually make an offer, which hasn't happened yet, and that offer was ridiculous, things could change.
"Nothing crazy has happened yet."
A flurry of tweets
According to a source with knowledge of family finances, but who was not authorized to speak publicly, the Maloofs may have been forced into the decision to consider a sale.
The team is $200 million in debt, and could lose between $6 million and $7 million during the current NBA season. That loss was largely a result of the team's increased payroll this year after the NBA's new collective bargaining agreement mandated teams must carry payrolls of at least $49 million, the source said. The Kings' payroll reportedly is $57.9 million for the current season, about $13 million more than last year.
The Maloofs intend to make a capital call to the minority owners of the Kings, seeking contributions to help cover the projected loss, according to the source – a development the source described as a potential "triggering event" for a sale of the Kings.
On Wednesday, several national media reports said a sale is near. A USA Today report said the Seattle group, headed by Hansen and Microsoft CEO Steve Ballmer, is confident a deal will get done.
Yahoo Sports went further, saying the two sides are close to signing a roughly $500 million deal. The report said the team would play at old KeyArena in Seattle for two years, then move into a proposed new arena south of downtown.
If the Kings do reach an agreement to sell, the move could not occur until next season, and would require approval from fellow NBA owners. The deadline for teams to file for relocation is March 1.
Kings representative Eric Rose told The Bee on Wednesday that the team had nothing to report. Rose has previously acknowledged that the Kings have been approached by numerous cities interested in wooing the team.
The flurry of speculation about a Seattle deal began oddly. Late Tuesday night, a food blogger whose father is a basketball agent tweeted excitedly that a deal between the Kings and the Seattle group was complete. She offered no source and later removed the post, but not before it was spread by more than 300 other Twitter users.
Reports swung wildly, from initial posts saying the deal was done to later reports that the Maloofs have rejected Seattle's overtures.
NBA officials declined comment Wednesday, as did a representative for Hansen.
Hansen has been working for the last year to bring NBA basketball back to Seattle. The SuperSonics left the city following the 2007-2008 season. Hansen's investor group has signed a financing deal with the city and county, purchased the land for the arena and launched an environmental review for construction of a $490 million facility.
In an afternoon news conference, Seattle Mayor Mike McGinn said "the next piece of the puzzle" is for Hansen's group to buy a team, but he said he could not confirm any deal with the Kings. He said he had not spoken to Hansen since that day's rumors surfaced.
A record price?
Should the Maloofs sell, several sources say they could receive a record price for an NBA team – possibly more than $500 million. The Golden State Warriors have the current top sales price of $450 million, recorded in 2010.
On Wednesday, Sacramento fans were gearing up to fight for their team again. The grass-roots organization Here We Stay, which has worked for two years to keep the Kings, launched an online petition drive urging the NBA to allow a Sacramento buyer to match any offer from Hansen, and give Seattle an expansion team instead. The petition had drawn more than 3,300 signatures by Wednesday night.
Wednesday was the second day in a row of big off-court news about the franchise. The team reportedly was in talks until recently with Virginia Beach, Va., officials about moving to that city. The Virginia Beach mayor announced Tuesday that deal was off, because the unnamed team and the potential arena operator could not come to a lease agreement.
The future of the Kings franchise in Sacramento has been unsettled since the Maloofs last year rejected a deal – endorsed by the NBA – to fund a new downtown arena to replace aging Sleep Train Arena in Natomas.
NBA officials described that as a last-ditch effort to keep the team in Sacramento. But at his Wednesday news conference, Sacramento Mayor Johnson said the capital city still has a chance.
"Our community's had their back against the wall on more than one occasion and this is going to be no different," he said. "We've done the impossible. We kept the team from going to Anaheim."
Johnson argued the Maloofs could make as much money by selling the team here, even if it didn't fetch as high a price as Hansen's group could pay. A local ownership group would potentially get a discount of more than $100 million, because it wouldn't have to pay the league's relocation fee of at least $35 million and wouldn't have to immediately repay the $77 million the team owes to the city.
"It's cheaper to stay here in Sacramento," Johnson said. The mayor said a Sacramento ownership group could include out-of-town investors, as long as it had local members and pledged in writing to keep the team here.
Johnson said he called NBA Commissioner David Stern and the Maloof brothers Wednesday, but could not reach them.
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