February 7, 2013

Maloofs file papers with NBA to move Kings to Seattle

The next shoe has fallen in Seattle's effort to wrestle the Kings away from Sacramento.

The next shoe has fallen in Seattle's effort to wrestle the Kings away from Sacramento.

Three weeks after the Maloof family agreed to sell the Kings to a group from Seattle, the team has formally filed for permission to relocate to Seattle, NBA Commissioner David Stern said Wednesday. While hardly unexpected, it's the first official confirmation of the group's intent to have the team play in Seattle next fall.

Stern called the Seattle group "very strong" and its application is being reviewed by the NBA. The league's board of governors, consisting of all the team owners, will have final say on the sale and relocation in mid-April. The Seattle group is led by hedge-fund manager Chris Hansen and Microsoft chief executive Steve Ballmer.

A source with knowledge of the situation said the Maloofs filed the petition sometime in the past week on behalf of the Hansen-Ballmer group.

If there was any surprise to the move, it was its timing. Sacramento officials have said they thought the Hansen-Ballmer group might wait until closer to the league's March 1 deadline before filing for relocation. Sacramento officials are preparing a counteroffer to keep the team in town, and Stern reiterated that Mayor Kevin Johnson will be allowed to present the proposal to the board of governors.

In his most extensive comments since the Seattle group announced its deal to buy the team, Stern said the NBA will consider a variety of factors in ruling on the Seattle purchase, including the level of support for the Kings in Sacramento and the likelihood that either city would be able to build a new arena.

"I don't think it's a bidding war," he told reporters in Minneapolis.

"That's why we have a board of governors, to make difficult decisions like this one," he added.

Hansen's group struck a deal Jan. 21 to buy the Maloof family's 65 percent controlling interest and move the team to Seattle in time for the 2013-14 season. Sources have said the deal values the franchise at an NBA-record $525 million, implying Hansen is paying the Maloofs about $340 million.

Sacramento community leaders involved in trying to keep the Kings declared themselves unruffled by Wednesday's news, calling it inevitable.

"Doesn't shake me at all," said Phil Oates, one of 25 area business executives who've pledged at least $1 million apiece to an effort to buy the Kings.

Added City Councilman Steve Cohn: "I don't think it changes anything in terms of Sacramento's approach, which is to offer the NBA a competing vision of what can happen here in Sacramento with the Kings if they stay. The ball is directly in our court at this point."

Johnson has vowed to submit a counteroffer to the NBA by March 1, leading up to his presentation to the owners in April.

Although the mayor hasn't announced the names of his major equity investors, it's known the group is likely to be led by Southern California billionaire Ron Burkle and Bay Area investor Mark Mastrov. Local investors such as Oates would be part of the Burkle-Mastrov financing package.

Burkle has already met with Stern in New York to pitch his plan for the Kings.

"I feel very good about our chances," Johnson said at a press conference Tuesday.

His proposal will include a financial package for a new downtown arena – something the NBA says is critical to cementing the team's future in Sacramento. The City Council tentatively agreed last spring to $255 million in public funding for the project, and Johnson said the financing is still on the table.

The Hansen group has a tentative deal with Seattle and King County officials to build a new arena, and Stern said "events are well under way, moving in that direction."

Separately, court documents filed this week shed new light on the Maloofs' interest in relocating the franchise after they abandoned a Sacramento arena project last April.

The filing in Clark County, Nev., District Court revealed that the Maloofs were in discussions to move the Kings to Henderson, Nev., a Las Vegas suburb, barely a month after the arena deal imploded in Sacramento.

On May 21, two Kings representatives – Tony Guanci, a longtime Maloof associate, and Bob Hernreich, a minority partner in the team – traveled to New York to hear a proposal from developer Christopher Milam, who was proposing an NBA arena in Henderson. Also in attendance were Henderson Mayor Andy Hafen and acting City Attorney Christine Guerci-Nyhus.

The meeting was revealed in court papers filed by Milam.

He's being sued by Henderson officials, who say he lied to them about the arena project in order to get the city's backing for a big land deal.

In his court filing, Milam insisted he talked to "numerous NBA franchises" about moving to Henderson, although the discussions with the Kings "were the most advanced of any."

City spokesman Bud Cranor confirmed the meeting took place, calling it "introductory."

It wasn't clear when Henderson's effort to land the Kings ended. In late August, it was revealed that the Maloofs were discussing a move to Virginia Beach, Va.

Virginia Beach gave up in early January, just before news broke that the Maloofs were negotiating with the Hansen-Ballmer group in Seattle.

The Seattle sale covers the 53 percent of the team owned by the Maloofs and the 12 percent owned by Hernreich.

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