Sacramento group seeking to buy Kings discounts Seattle's increased bid
04/14/2013 12:00 AM
10/06/2014 5:32 PM
The Sacramento contingent seeking to buy the Kings held back Saturday from delivering a counter to an increased bid for the franchise from Seattle, instead portraying the new offer as a move of desperation that is unlikely to sway the NBA's decision on which city will get the franchise.
It remained unclear Saturday when the Sacramento group would file its own formal and written offer for the team – or whether that bid would match the new offer on the table from a Seattle contingent led by hedge fund manager Chris Hansen and Microsoft executive Steve Ballmer.
A legal expert told The Bee that the NBA has the right to accept a lower offer.
The NBA said it has scheduled a special meeting of a committee of team owners to review Seattle and Sacramento's offers Wednesday in New York, a day before the league's board of governors convenes. Unlike the meeting the committee held April 3, this time the owners won't entertain presentations from either city.
The committee will eventually recommend to the league's board of governors – consisting of all 30 team owners – whether to accept the Seattle bid or keep the team here. A decision by the board on the matter could come as early as Thursday or Friday.
Hansen announced late Friday that he and the Maloof family, which has owned the Kings since 1999, had agreed on a sale price that valued the team at $25 million above what the parties had agreed upon in January.
Under the new agreement, the team would be valued at $550 million – meaning the Maloof family and partner Robert Hernreich stand to make nearly $360 million for their 65 percent interest in the franchise if the transaction is approved by the NBA.
The overall team value is $100 million above the record price for an NBA franchise.
The increased bid was made public late Friday, just hours after a source close to the situation told The Bee that the Sacramento contingent had notified the NBA it planned to match the original Seattle offer.
Earlier Friday, Sacramento Mayor Kevin Johnson announced that former Facebook executive Chris Kelly had joined the group, which also includes Silicon Valley software tycoon and Golden State Warriors minority owner Vivek Ranadive; 24 Hour Fitness founder Mark Mastrov; members of San Diego's Jacobs family, founders of telecommunications giant Qualcomm; and Sacramento developer Mark Friedman.
A source said the group had begun turning away wealthy investors seeking to join the bid.
Despite the escalating value of the Seattle bid, NBA Commissioner David Stern has said he did not expect a bidding war between the two cities.
Those close to the Sacramento bid brushed aside the new offer, with a source close to the situation saying the added $25 million from Hansen "isn't that much money in the grand scheme of things."
The Hansen and Ballmer group was quiet Saturday.
The Maloofs also were quiet Saturday about whether they were still open to considering a backup bid from Sacramento. They had previously told Sacramento they wanted a backup offer by Friday. Sacramento did not deliver, choosing instead to work with the NBA on fashioning its bid and making its case.
The Sacramento contingent claimed Hansen's new, higher bid was not altering its approach for keeping the city's lone major-league sports franchise.
Mayoral spokesman Ben Sosenko would not say when the group planned to file its bid with the NBA or whether that bid would match the increased offer from Hansen.
"We are prepared to keep the same full-court press that we've applied over the last few months," Sosenko said.
A source close to the situation said the Sacramento investors remain in "constant contact" with the NBA and the Maloof family.
The source said the investment team continues to exchange documents with the league regarding the city's plans for a new downtown sports arena, information on the members of the proposed ownership team and details on the group's plans for bidding on the Kings. The source said the Sacramento contingent is "actively engaged with the process that the NBA has set forth" for making a bid on the team.
Irwin Raij, a New York sports attorney, cautioned against Sacramento dismissing the new Seattle offer.
"If the league decided that $25 million is an important fact and gives Sacramento a chance to match and Sacramento doesn't match it, then that speaks for itself," he said.
Raij, however, said he was not convinced that $25 million is enough to sway the league toward accepting the Seattle offer. The bid, he said, "is not the sole fact. There's other factors the league takes into consideration."
After presentations by both cities earlier this month, Stern said the league was particularly interested in which side had the more solid arena plan. Both cities have small and aging arenas that the league has deemed inadequate.
Sacramento officials announced Friday that they had begun the environmental review process for a planned $447 million arena to be built at the site of the Downtown Plaza; that review process is expected to take at least 12 months. The City Council has approved a preliminary financing plan for the facility that includes a $258 million public subsidy.
Seattle is roughly six months into its own environmental review for a proposed $490 million arena south of downtown, and officials there have said they expect those reviews to be completed in November.
Seattle cleared a hurdle Friday when a judge dismissed a lawsuit that claimed the arena plan violated a city law prohibiting public assistance to sports arenas unless those projects can guarantee a profit.
Raij said the arena plans will play an important role in the NBA's decision.
"You have to think about the long-term security of that franchise," he said.
Johnson has lauded the Seattle effort but has argued that Sacramento's arena plan and fan support of the Kings are strong in their own right.
A source close to the group said the NBA is also intrigued by the prospect of adding Ranadive to the ranks of the league's owners, given the India native's plans to create a global reach with the team.
The source said "the television rights from a billion eyeballs in India" should be more persuasive to the league than $25 million tacked onto the Kings purchase price.
There is apparent precedent for NBA franchises being sold to owners who did not make the highest bid on teams.
Software billionaire Larry Ellison lost a bidding war for the Golden State Warriors in 2010 and later told media outlets that he had made the highest offer. Mastrov had made a bid of his own, losing to eventual winner Joseph Lacob and his $450 million deal – at the time a league record.
Raij said the NBA is not legally obligated to accept the highest offer.
"The league has the right to approve the locations," he said.
FOLLOWING THE KINGS
Sacramento Bee reporter Ryan Lillis will report from the NBA board of governors meeting in New York Thursday and Friday.
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