Sacramento's drive to keep the Kings took a dramatic turn Saturday when a new group, aligned with the owner of Downtown Plaza, proposed to buy the team and build a $400 million arena on the shopping center site.
A source close to the situation said the group was lining up deep-pocket investors to work with the mall's new owner, JMA Ventures, and present a credible alternative to the Maloof family's efforts to sell the Kings to a group planning to move the team to Seattle.
"We want to make a run at the Kings if we can afford the price," said the source, who insisted on anonymity because the plan remains in its early stages.
JMA spokesman Jeff Nead confirmed the mall owner is interested in the arena project – and has been contacted by more than one investor group considering a bid for the Kings. He declined to identify any of the investors.
"They want to work toward saving the team," Nead said. "JMA has been getting calls from a number of people."
Downtown Plaza has been mentioned at least twice before as an arena site, with City Hall staff members concluding in 2004 that it was likely too expensive. But Nead said a feasibility study performed recently by AECOM – an architectural-engineering firm that has designed several NBA arenas – showed considerable promise.
Sources close to the Maloofs but not authorized to speak publicly say the family has been negotiating a possible sale to a Seattle group led by hedge-fund manager Chris Hansen. Yahoo Sports and Comcast Sports Net have pegged the price at $500 million to $525 million. The family, through its spokesman Eric Rose, declined to comment on the situation Saturday.
The Downtown Plaza proposal followed a week of frenzied media reports over the fate of the Kings, with most individuals close to the negotiations refusing to be quoted publicly.
Still, two key names have emerged as possible Sacramento bidders for the Kings. Billionaire grocery tycoon Ron Burkle, who tried to buy the team in 2011, was identified as a possible suitor last week by Mayor Kevin Johnson and NBA Commissioner David Stern.
And on Friday, wealthy Bay Area investor Mark Mastrov – a runner-up in the bidding for the Golden State Warriors in 2010 – declared he's assembled a group eyeing a bid.
Any sale involving the Kings would require approval by the NBA board of governors. Johnson has pledged to present the NBA with a viable alternative to Hansen – a consortium of owners who would buy out the Maloofs, keep the team in Sacramento and commit to a new arena.
City officials say any credible proposal to the NBA has to include a plan for a new arena, which would breathe life into the troubled franchise.
Mastrov, the founder of the 24 Hour Fitness chain, said he likes the arena plan the city and the NBA negotiated with the Maloofs last spring – a $390 million project at the railyard just north of downtown, with a $255 million contribution from the city.
The Maloofs abandoned that project, putting the team's future in Sacramento in doubt.
Johnson has said the $255 million is still available for the city to use on other projects, including an arena. The money would come from a complicated plan that would extract funds from city parking lots and meters.
For the mayor, having ultra-wealthy investors in tow will be the key to persuading the NBA to side with Sacramento instead of Seattle.
Two years ago, when the Maloofs were thinking of moving the team to Anaheim, Johnson revealed that Burkle wanted to buy the Kings and keep them in town.
The Maloofs angrily rejected his offer, but it helped tilt the argument toward Sacramento. The Maloofs backed away from the Anaheim proposal, and Johnson said last week he still considers Burkle a contender.
Tellingly, Stern last week said he favored giving a Sacramento bidder – namely Burkle – a chance to match Seattle's offer.
While the Seattle group might offer at least $500 million, Johnson is working to secure a bid of around $400 million.
Sacramento officials say such a bid would give the Maloofs just as much money as Seattle. That's because Seattle would have to fork over at least $100 million in moving costs, including the NBA's relocation fee and the immediate repayment of a debt to the city of Sacramento.
A Sacramento bidder would be spared the relocation fee, and would simply assume the debt to the city.
The Maloofs haven't said the team is for sale, but sources say the family is open to the idea after several financial setbacks, including the loss of the Palms Casino in Las Vegas. The Kings are on track to lose $7 million this year and are $200 million in debt, sources say.
JMA, a San Francisco investment firm, bought the ailing Downtown Plaza shopping center last August for a mere $22 million. Nead said the firm quickly commissioned an arena feasibility study, realizing that it could play a role in keeping the Kings in town.
The study showed the plan could work.
"It's a great opportunity; the site could work extremely well," said Bill Crockett, director of sports architecture at AECOM. He said the arena would consume part of the mall.
AECOM's résumé includes the new Barclays Center arena in Brooklyn. The firm is designing the proposed waterfront arena in San Francisco for the Warriors.
In 2004, then-Mayor Heather Fargo and the Maloofs unveiled an arena proposal for the east end of the mall. The plan fizzled after a city staff report concluded that the cost – at least $528 million – was too high. The mall's owner at the time, Westfield Corp., also offered resistance.
Although recent proposals have revolved around the railyard, the Downtown Plaza site has long been seen as preferable because of its proximity to restaurants and light rail, said Michael Ault, executive director of the Downtown Sacramento Partnership.
"It was from the beginning a site that was seen as being the most logical," Ault said.
POSSIBLE KINGS BUYERS
This wealthy hedge fund manager has a tentative deal with the city of Seattle to build a $490 million basketball and hockey arena, but won't start construction until he finds a team. His backers include Microsoft executive Steve Ballmer and members of the Nordstrom family.
Mastrov founded 24 Hour Fitness and sold it in 2005 for $1.7 billion. He made an unsuccessful $350 million bid for the Golden State Warriors when the team sold for $450 million – an NBA record – in 2010. Lives in Lafayette and says he has wanted to buy the Kings for "a long time."
This billionaire supermarket magnate is a well-known Democratic fundraiser. With his partner Darius Anderson, a Sacramento lobbyist, Burkle emerged in 2011 with an offer to buy the Kings to keep the Maloofs from moving the team to Anaheim. No price tag was revealed, and the Maloofs rejected the notion of selling. Burkle, part owner of the Pittsburgh Penguins, has not confirmed that he is still interested, but Mayor Kevin Johnson said he has been in frequent contact with him.