January 30, 2013

How NBA would evaluate competing bids for Kings

With two proud cities fighting for control of the Sacramento Kings, the National Basketball Association will soon be called upon to pick a winner.

With two proud cities fighting for control of the Sacramento Kings, the National Basketball Association will soon be called upon to pick a winner.

But how?

One city, Seattle, has signed a tentative, $340 million deal with the Maloof family to buy and move the team, and appears to have the inside track. Sacramento, in turn, is expected to counter any day now with a bid of its own, and has been gaining momentum in recent days.

It's unprecedented, said Bay Area sports consultant Andy Dolich, a former NBA team executive. "This is a unique circumstance. We have a thoroughbred horse race."

A decision is expected in mid-April, when the 30 NBA owners convene for a postseason board of governors meeting in New York.

The NBA brain trust is offering few clues on which way it's leaning, or how it will decide, leaving NBA pundits guessing, radio talk shows buzzing and two cities pitching their merits.

"From a solid deal standpoint, Seattle has the stronger position right now," said Dolich, who was an executive with the NBA's Grizzlies when they moved from Vancouver to Memphis. "They have an arena plan. They have a deal in place with the Maloofs. They have a pre-existing (NBA) market which has shown strength."

The conventional wisdom is that owners would be reluctant to reject a fellow owner's business deal, especially when the sales price represents a record team valuation that could boost the worth of all teams.

League officials also reportedly would like to see the financially stressed Maloofs gone, and approval of a Seattle sale is the quickest route to accomplish that.

But some NBA watchers and local officials say Sacramento has a solid chance to save its team, and is gaining momentum almost daily after appearing dead and done two weeks ago.

They argue that league owners will not want the negative publicity from abandoning another supportive city whose leaders have done what the NBA has asked in the last two years, including putting together an NBA- approved arena deal last year. The Maloof family rejected that deal.

"I would challenge any community our size in the country to display that enthusiasm and those resources in demonstrating a desire to keep their team," said Sacramento Councilman Jay Schenirer.

To have a chance, Sacramento must present the league in the next few weeks with a legitimate, sufficiently wealthy purchase group, a strong offer from that group, and solid evidence that it can get an arena built.

A source with inside knowledge of the NBA, who declined to speak for attribution because the NBA has called for a no-talking policy, said the league is clearly signaling it wants a proposal from Sacramento.

"Sacramento has a real fighting chance," the source said. The NBA "knows how the community has responded to the team. If a deep-pocketed group buys, if the Maloofs get the same amount of money, and an arena set up, it will be difficult for the board of governors to just dismiss that."

Possible court fight

There is precedent on Sacramento's side, as well. The league owners stopped the sale and relocation of the Minnesota Timberwolves in the early 1990s due to concerns about the finances of the would-be purchasers.

Top NBA officials told The Bee last year the league also takes into account the competition its team would face in each market. The Kings are the only major league sports team in Sacramento. Seattle has major league football, baseball and soccer, as well as college sports.

Sacramento Mayor Kevin Johnson and the Sacramento ownership bidding group must persuade at least eight of the league's 30 owners to oppose the Seattle sale. League rules require a three-fourths majority vote to approve any sale.

Sacramento may have another legal shot at nullifying or delaying a Seattle sale. A local bankruptcy trustee who controls 7 percent of the team said on Tuesday he plans to bring in special litigation counsel to pursue claims that minority owners are being denied the right to match the Seattle purchase offer.

"This could be a situation that takes some time to resolve, which I think works in favor of Sacramento Kings fans," said Michael McCann, a sports-law expert at the University of New Hampshire.

The NBA itself may be the one sure winner in the Kings saga. League officials appear to have turned the ongoing Kings turmoil into a public relations positive that could potentially boost the value of all teams in the league.

The Seattle sales agreement is based on a record $525 million team valuation ($340 million is for the majority share controlled by the Maloofs), and NBA experts say that price tag could go even higher when a Sacramento group steps in to offer a bid.

Sacramento's emerging group, headed by grocery billionaire Ron Burkle and 24 Hour Fitness founder Mark Mastrov, has been silent publicly but is taking steps that show it intends to mount a serious effort.

Mastrov, a Bay Area resident, was in Sacramento on Monday, meeting with some of the 21 local investors who have agreed to pitch in $1 million each toward a Sacramento purchase bid. Several of them came out of that meeting saying Mastrov struck them as a focused and highly competitive businessman who fully intended to win the battle for the Kings.

And officials at the NBA's normally tight-lipped New York offices let it be known last week that Stern had met with Burkle. Burkle briefed Stern on his partnership's plans, including a new arena at Downtown Plaza instead of the troublesome railyard.

Stern also recently told reporters that Burkle should be given a chance to make an offer. NBA watchers say those aren't necessarily indications that Stern favors Sacramento.

"It is in the commissioner's best interest to get as many bids as possible," said the source with knowledge of the NBA's thinking.

A private vetting

Multiple interviews and a review of an internal NBA document suggest Sacramento will get a private vetting by the league long before Mayor Kevin Johnson makes his planned public pitch to NBA owners in New York in April.

The Maloofs likely are prohibited from entertaining other offers now because of an exclusive agreement they are believed to have signed with the Seattle group.

The Burkle-Mastrov group instead would submit its proposal directly to the league office for forwarding to the league's advisory/ finance committee, the group of a half-dozen owners that is reviewing the Seattle group's finances.

The finance committee will at some point issue a recommendation to the full NBA board of governors, which can vote yes or no on the sale to Seattle. It cannot, however, require the Maloof family to sign a deal with the Sacramento group.

The Maloofs two years ago angrily rejected Burkle's unsolicited overtures to buy the team, but a source close to the matter said Mastrov knows the Maloofs and has a cordial relationship with them.

A second NBA committee, the relocation committee, will be tasked with analyzing Seattle's arena plans and that city's strength as an NBA city. An NBA guiding document states the committee will consider how well the Maloofs have managed the team and will assess "the support of the team in the existing location by fans, telecasters, broadcasters and sponsors."

Questions have arisen about a potential conflict for relocation committee chairman Clay Bennett. Bennett has been vilified by some in Seattle for buying the Seattle SuperSonics and moving them to Oklahoma City as the Thunder in 2008.

Seattle city officials told The Bee that Bennett does not have a financial conflict of interest. A previous requirement that Bennett pay the city $30 million if Seattle doesn't get an NBA team by July 2013 has been voided because Seattle hasn't yet made specified renovations to KeyArena.

NBA officials declined to comment on whether Bennett may have a personal conflict of interest that might cause him to favor or oppose returning a team to Seattle.

The league also declined to comment about speculation on a scenario in which the NBA would offer an expansion team to one of the cities or offer a distressed owner from another city the chance to sell to either Seattle or Sacramento.

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