Maloofs serve ultimatum to Sacramento: Make binding bid for Kings by Friday
04/11/2013 12:00 AM
10/01/2014 2:18 PM
The Maloof family has given Sacramento an ultimatum: Come up with a solid bid to purchase the Kings by 5 p.m. Friday, or we won't even entertain your overtures.
A source close to those negotiations told The Bee on Wednesday that the Maloofs have given the ultra-wealthy investors seeking to keep the team in Sacramento two more days to submit a written, binding "backup" offer that matches the deal the family has in place to sell the franchise to a group in Seattle.
If the Maloofs receive a matching offer by the end of business Friday, they will consider it as a serious backup proposal should the NBA nullify their tentative deal with Seattle, the source said. If the offer doesn't arrive in time – or falls short of matching the Seattle bid – the Maloofs said they wouldn't negotiate with the Sacramento group.
The source, who was not authorized to speak about the deal, said the NBA a few weeks ago forwarded a "statement of interest" in buying the team to the Maloofs from Sacramento-based investors.
NBA Commissioner David Stern later said the dollar amount in that offer was substantially lower than the deal on the table from Seattle. The source described that initial bid as "not even close" to the reported $341 million offer from Seattle.
Since that initial offer was made March 1 by East Bay health club financier Mark Mastrov, the Sacramento team has pitched a more lucrative bid to the NBA.
In recent weeks, Silicon Valley software tycoon Vivek Ranadive has taken the lead on the local offer for the team, and Southern California billionaire Ron Burkle has withdrawn from the ownership group because of a conflict of interest. Ranadive is joined by Mastrov; the Jacobs family of San Diego, founders of communications giant Qualcomm; and Sacramento developer Mark Friedman.
Following presentations last week in New York from both sides, Stern said the discrepancy between the Seattle and Sacramento offers was no longer an issue. NBA Deputy Commissioner Adam Silver and others have also pointed out that the offers from Seattle and Sacramento are structured differently and have different financing components, which could add to the difficulty of determining whether Sacramento's bid matches up.
Mayor Kevin Johnson, speaking to reporters at halftime of Wednesday night's Kings game at Sleep Train Arena, wouldn't speculate on why the Maloofs delivered the ultimatum. But he said the Sacramento investors are following the rules laid out by the NBA and are in regular contact with the Maloofs and their lawyers.
He said the Maloofs are well aware of how much the Sacramento group is offering. "They know the number – trust me, they know the number."
In terms of competitiveness with Seattle, the mayor said the Sacramento group's latest offer "is essentially everything it needed to be" but he doesn't know if it has been submitted to the Maloofs in legal, contract form.
"I can't speak (to) what documents that people are signing or not," he said.
State Senate President Pro Tem Darrell Steinberg, D-Sacramento, said in an interview Wednesday that the Sacramento offer is "strong and fully competitive."
"I don't want to get too precise here, but it is as strong as the Seattle offer," said Steinberg, who took part in Sacramento's presentation to the NBA in New York. "It is equivalent to the Seattle offer." Steinberg declined to reveal the value of the Sacramento offer.
Contacted for comment, Maloof family spokesman Eric Rose said, "Our policy is not to negotiate in public."
A spokesman for the Sacramento bidders declined to comment.
It's not clear if the Maloof ultimatum carries any legal force. The family's deal with Seattle requires the approval of three-quarters of the league's board of governors, consisting of the league's 30 team owners. The board is expected to decide the issue at its meeting April 18 and 19, although Stern has said it could take longer.
The Maloofs agreed in January to sell their controlling interest in the Kings to the Seattle investors, led by hedge fund manager Chris Hansen and Microsoft CEO Steve Ballmer. If the deal is approved, the team would move to Seattle in time for the 2013-14 NBA season and be renamed the SuperSonics.
The Maloofs' demand for a matching Sacramento offer could indicate that the family has some doubts about whether the NBA will approve the Seattle proposal, said Bay Area sports consultant Andy Dolich.
"They're clearly reaching out" to the Sacramento investors, said Dolich, a former executive with the Memphis Grizzlies.
Irwin Raij, a sports industry lawyer from New York, said the Maloofs could be trying to undermine Sacramento's effort by arguing to the NBA that only one group has submitted a binding offer – the Seattle group.
But they also may be hedging their bets in case the league rejects Seattle's offer. "The fact that they're actually asking for a true backup contract the message they're sending is, they want to sell," said Raij, who worked on an earlier version of Mayor Kevin Johnson's arena task force in 2009.
The question of how the Maloofs would respond to a rejection of the Seattle plan has been one of the great mysteries surrounding the Kings drama.
Johnson, following his presentation last week to a committee of NBA owners, said, "We were told all along that the Maloof family had an opportunity to accept another offer, a backup offer."
Stern told reporters in Oakland last month that the league has "the ultimate decision as to who the team will be sold to and where it will be located."
But Michael McCann, a sports-law expert with NBA TV, said it's doubtful the league could force the Maloofs to sell the Kings to the Sacramento bidders. While the NBA has ultimate power over letting new owners into the league, "it has much less authority over whether an existing owner gets kicked out of the club," McCann said.
Sources have said the Kings borrowed around $125 million through a line of credit arranged by the NBA in 2009. McCann said it's not clear if that debt gives the league the authority to force a sale.
Either way, if the offer matches Seattle's bid, "I don't know why they wouldn't take the offer from Sacramento," McCann said. "Money's money."
Call The Bee's Tony Bizjak, (916) 321-1059. Follow him on Twitter @tonybizjak.
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