March 11, 2013

Sacramento backers say their NBA allure beats Seattle's

Sacramento has less than six weeks to convince the NBA that the Kings are better off not moving to a larger, wealthier city where investors have made a more generous offer to buy the team.

Sacramento has less than six weeks to convince the NBA that the Kings are better off not moving to a larger, wealthier city where investors have made a more generous offer to buy the team.

As its fight with Seattle heats up, Sacramento is casting itself as the scrappy underdog – the small market that has loyally supported the Kings and is doing everything in its power to keep the team. It appears to have the sympathy of NBA Commissioner David Stern, who has championed Sacramento over the years and is urging the city's investors to strengthen their bid for the Kings.

Ultimately, the decision will have little to do with sympathy. Issues of dollars and cents will rule the day, including data on economic factors such as per capita incomes and television markets. Much will depend on the strength and credibility of each city's proposal for a new, NBA-worthy arena.

First and foremost, though, Sacramento must improve its offer for the team. Without going into details, Stern said Friday the offer submitted by Sacramento's investors, health club financier Mark Mastrov and supermarket tycoon Ron Burkle, "needs to be increased."

Seattle's group, led by hedge fund manager Chris Hansen and Microsoft CEO Steve Ballmer, agreed to pay $341 million for the 65 percent share controlled by the Maloof family. The Sacramento group hasn't made the details of its offer public.

Mastrov said he wasn't troubled by Stern's assessment and "We are aiming to win the bid." Sacramento Mayor Kevin Johnson said Mastrov and Burkle "know what they need to do. They have the wherewithal."

And if Mastrov and Burkle do field a competitive offer? Sizing up the two cities remains difficult. For every point in Sacramento's favor, there's one for Seattle.

With its larger population and glittering array of corporate headquarters, Seattle seems to have the edge in demographics. Yet Sacramento offers the NBA a monopoly market and, until recently, a sterling attendance record – a better record than Seattle had when the SuperSonics were in the NBA.

NBA team owners, who will decide the matter at a meeting April 18 and 19, are generally reluctant to move a team, particularly one that has succeeded in the past. But they're also hesitant to vote down one of their own – in this case, the Maloofs, who made the deal to sell and move the Kings.

Intangibles will surely come into play. The NBA wants to return to Seattle, a city it deserted amid considerable rancor in 2008. Then there's Johnson, a former NBA star whom Stern praised for his "Herculean effort" to keep the Kings.

Some NBA watchers say they think Stern favors Sacramento. He was in the room last year closing the deal on a new Sacramento arena with the promise of millions in financial aid from the NBA. The Maloofs later killed the project.

Stern "has spent a lot of time trying to save the franchise," said Bill Sutton, a former NBA marketing vice president. "He has sweat equity in this. I think he would like to see it work out."

On Friday, speaking to reporters before a Golden State Warriors game in Oakland, Stern said he wants Mastrov and Burkle to erase the "substantial variance" between their bid and Seattle's.

"I have an expectation, a hope, that the variance will be eliminated," Stern said.

Reviving the franchise

The two cities will go head-to-head April 3, at a meeting in New York set up by Stern to vet the proposals.

When all the NBA owners meet later in April, the Seattle group will need yes votes from at least three-quarters of the 30 team owners who make up the board of governors.

If Seattle is voted down, Stern suggested the league might have a way to steer the sale of the team to the Sacramento group.

"It is for the board of governors to make the ultimate decision as to who the team will be sold to and where it will be located," he said.

Experts say the NBA will favor the plan that's likely to pump the most life into an ailing franchise. Under new rules of expanded revenue sharing, in which wealthy teams must send more money to their poorer cousins, Sutton said the NBA wants the Kings to stand on their own two feet.

Owners will choose the city that's "going to ensure the long-term stability of the franchise," said Sutton, a sports consultant in Tampa.

Financial matters aside, it's unclear whether NBA owners would stand in the way of the Maloofs' decision.

"There will always be deference to a fellow owner," said Andy Dolich, a former Memphis Grizzlies executive.

Only once in 30 years has the NBA vetoed a sale, when it rejected a 1994 deal to buy and move the Minnesota Timberwolves to New Orleans. The buyers' finances were considered too shaky.

No one doubts the credentials of the Kings' bidders. All four are wealthy men, though Seattle's are richer.

Ballmer is worth $16 billion. He earned Stern's thanks for leading an unsuccessful effort to keep the Seattle SuperSonics from moving to Oklahoma City in 2008.

Mastrov, who is leading the bid for the Kings, was runner-up bidder for the Golden State Warriors in 2010, falling $30 million short.

Burkle tried to buy the Kings in 2011.

His interest helped persuade the NBA to blunt the Kings' attempt to move to Anaheim. The Maloofs backed off without actually filing for relocation.

Besides a $3 billion net worth, Burkle provides credibility as majority owner of hockey's Pittsburgh Penguins. He negotiated the 2007 deal for the team's new arena.

Now his focus is on developing a Kings arena at Downtown Plaza.

Both cities are moving ahead on arena plans, but neither has proved yet it can get one built. Whichever proposal seems more credible could tip the scales in April.

"It's doubtful that either (city) can put a deal on the table that is absolutely, without question, Teflon-coated done," said Dolich, now a Bay Area sports consultant.

Seattle and King County tentatively agreed in October on a $200 million arena subsidy. Environmental reviews are under way.

Sacramento, meanwhile, just started formal talks with Burkle and Mastrov.

But Sacramento isn't starting from scratch on its arena plan. City officials say the deal they crafted with the Maloofs last spring for an arena at the railyard – negotiated in part by Stern – creates the foundation for a Downtown Plaza project with Burkle and Mastrov. City Manager John Shirey expects to present a preliminary "term sheet" to the City Council on March 26.

Cash from city parking

The city subsidy likely would total around $255 million, the same amount offered to the Maloofs last year. As before, most of it would probably come from borrowing against city parking operations.

"Last year's deal is in a lot of ways the model for this one," said Kunal Merchant, head of the mayor's arena task force.

It won't be enough to guarantee construction. Sutton said the NBA will scrutinize each deal for its ability to enrich the team.

"What's the capacity of the new venue to generate revenue?" Sutton said.

Public subsidies could become crucial, Dolich said. The heavier the public funding, the more beneficial the arena is for the owners.

NBA guidelines say the board must also weigh each city's economic outlook, with an eye toward forecasting attendance, TV revenue and corporate support.

Seattle, home to such companies as Microsoft and Amazon, offers a potentially more lucrative market.

Yet Sacramento officials argue the numbers favor them. They've taken Seattle's strong suits – such as its several hundred thousand additional TV-watching households – and divided them by the number of major league teams that would compete for fans and corporate dollars.

Using that method, they concluded Sacramento – where the Kings are the only major league team – is a stronger NBA market.

This view has some support in NBA circles. "When you're the only show in town there's definitely a positive thing to be said for that," Sutton said.

Sutton said the dramatic decline in attendance at Kings' games in recent years "is going to hurt" Sacramento, but the league also realizes why fans – turned off by the Maloofs' lack of commitment to Sacramento and the team's poor play – have stayed away.

Sacramento will point to this: The Kings outdrew the SuperSonics during 20 of the 23 years both cities were in the NBA. The Kings recorded 19 seasons of complete sellouts vs. six for the Sonics.

"Sacramento is a far stronger market than it gets credit for," Merchant said.

Call The Bee's Dale Kasler, (916) 321-1066. Follow him on Twitter @dakasler.

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