January 16, 2013

Johnson will pitch case to keep Kings in Sacramento to NBA governors

Mayor Kevin Johnson has drawn up his play to keep the Sacramento Kings. And once again, it involves going one on one with another city in front of the NBA's highest court.

Mayor Kevin Johnson has drawn up his play to keep the Sacramento Kings. And once again, it involves going one on one with another city in front of the NBA's highest court.

Johnson said Tuesday he's been granted an audience with the NBA board of governors, consisting of the league's 30 team owners, to present a competing bid that would prevent the Maloof family from selling the Kings to a group from Seattle.

A powerful ally for Sacramento came forward Tuesday: Arena operator AEG, which pledged $59 million to the downtown arena project abandoned by the Maloofs last spring, said it's still committed to the idea.

AEG Chief Executive Tim Leiweke, during an appearance at the Capitol, said he received encouragement in recent days from Johnson and NBA Commissioner David Stern. "To the commissioner's credit, I don't think he ever forgot about Sacramento," said Leiweke, adding that Stern does not like to move franchises.

The mayor plans to present at least one ownership group directly to the board of governors, probably in mid-April in New York following the conclusion of the NBA's regular season. Johnson, who spoke with Stern over the weekend, said he wants his plan finalized before the March 1 deadline for the Kings to seek relocation.

The board of governors has final say over team sales and relocation requests.

Johnson's arena plan could involve parts of the tentative deal approved by the City Council last year for a $391 million facility in the downtown railyard. A second, less complete proposal has emerged to build a new arena at the site of the Downtown Plaza.

Either way, Johnson said a plan to compete with Seattle's bid has to include a package for a new arena.

Leiweke said AEG will let the city take the lead on choosing a location for the arena. Even though the privately held entertainment conglomerate has been put up for sale, he said AEG's commitment to the Sacramento project hasn't wavered.

"It was not our idea to discontinue the conversation," he said, referring to the Maloofs' decision to scuttle the railyard plan. "We haven't changed our opinion about Sacramento or the arena."

Leiweke came to the Capitol to display the Stanley Cup hockey trophy, won last year by the AEG-owned Los Angeles Kings.

Johnson's strategy to match Seattle's bid isn't just about finding a local group to buy the team from the Maloof family, which has controlled the franchise since 1999. He said he will also try to convince the NBA that Sacramento is the better market for the Kings franchise.

He plans to cite attendance figures for the Kings and Seattle SuperSonics – a franchise that moved to Oklahoma City in 2008 – as proof that his city has the more rabid fan base. And he will highlight the fact that a team in Seattle would have intense competition with other big-time sports for the attention of fans.

"We want this to be the final act of a saga that's gone on for far too long," Johnson told the crowd assembled at the Sacramento Convention Center Tuesday for the State of Downtown breakfast.

The key to Johnson's plan is persuading a potential owner to spend hundreds of millions of dollars on the Kings and a new downtown arena. The mayor has conducted talks with a short list of wealthy potential buyers who he says are interested. His goal: to pair at least one of those investors with local partners.

Suitors lining up

Political strategist Chris Lehane, who has served for two years as a lieutenant to Johnson on the arena issue, said there are several groups who have shown interest in Johnson's plan, including some who have dealt with the NBA before.

"There has been a significant expression of real interest from entities that would have the wherewithal to own and run an NBA team up to NBA standards," Lehane said. "There are groups out there who have gone through this process with the NBA before. You want a high degree of confidence when you walk into an NBA discussion in April, or whenever, that you have a group that passes the NBA's standards test."

The list of potential suitors includes Bay Area investor Mark Mastrov, the founder of the 24 Hour Fitness chain who in 2010 made an unsuccessful bid of a reported $350 million to buy the Golden State Warriors.

Sleep Train Mattress Centers executive Dale Carlsen, whose company is the naming sponsor on the Kings' current arena, has expressed interest in being part of an ownership group. And on Tuesday, Sacramento developer David Taylor – who signed on as the developer of the railyard arena – said he had "talked to several different groups" about getting involved.

"I could play a role either (being part of an ownership group) or helping to get an arena built or both," he said, while emphasizing he does not have the wealth to play a lead role in buying the team.

Another potential bidder is billionaire supermarket tycoon Ron Burkle, whose associate Darius Anderson made a surprise appearance with Johnson before the NBA board of governors in 2011 saying they wanted to buy the team. The Maloofs refused to sell, but the NBA pressured them into dropping a planned move to Anaheim.

Burkle still shows signs of interest. David Flemmer, a bankruptcy trustee who controls developer Bob Cook's 7 percent share of the Kings, said Burkle's representatives recently inquired about Cook's stake in the team.

Chris Hansen, the hedge-fund manager seeking to buy the team and move it to Seattle, has also contacted Flemmer about Cook's 7 percent. A local group has also inquired, Flemmer said.

Finally, there's an investor whom Lehane described as a "whale," but whom he would not identify because he has had only preliminary discussions with the mayor.

"It's like a first date," he said. "You have a nice bottle of wine and drop them back at the house."

Viable arena plan is vital

The mayor said the Maloof family "can participate in some way" in the new Sacramento ownership group "if they want to remain a part of this team and this community."

Johnson said he believes the Seattle group's offer for the Kings values the franchise at $525 million, which he called "outrageous."

As it has in the past, the Kings' future in Sacramento will also be tied to the mayor's ability to secure financing for a new arena.

Lehane said the continued viability of the city's arena plan – which was brokered by Johnson and Stern last year – is a positive for Sacramento. It gives prospective owners a decent understanding of what they would have to do get an arena built in Sacramento.

In addition to the AEG pledge, the term sheet approved by the City Council last March called for the Kings to contribute roughly $75 million toward the project. The city planned to chip in $255 million through leveraging downtown parking spaces and garages, a plan city officials said is still on the table.

In the end, Johnson may have to convince the NBA that Sacramento is a better pro basketball city than Seattle, which was home to the SuperSonics for 41 seasons.

Besides bringing an owner to the table, the mayor said he would point out that the NBA would compete with the NFL, major league baseball, Major League Soccer and Pac-12 collegiate sports in Seattle. The Kings are Sacramento's only big-league team and have "100 percent of the market share," the mayor said.

Johnson said Sacramento also has shown itself to be a more loyal NBA city than Seattle. The Kings' average attendance was higher than the Sonics' in nine of the last 10 seasons the NBA played in Seattle.

"I hope Seattle gets another team, they deserve another team, they didn't deserve to lose a team in the first place," the mayor said. "It just won't be the Sacramento Kings if we have anything to do with it."

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