Crucial week ahead for Sacramento group's offer to buy Kings
05/13/2013 12:00 AM
10/06/2014 5:16 PM
Despite repeatedly dismissing overtures from a Sacramento group eager to buy the Kings, the team's owners have not closed the door on that possibility and were receiving updates from the NBA on the Sacramento group's efforts as recently as this weekend, a source said Sunday.
The team "still has that option," said a source with knowledge of the Maloof family's thinking.
As they head into what could be a historic NBA meeting Wednesday and conferences today on the Kings future, however, the Maloofs continue to make it clear they prefer to cement a deal with the Seattle group led by hedge fund manager Chris Hansen.
Hansen and Microsoft CEO Steve Ballmer have agreed to pay the Maloofs and their partner Bob Hernreich the unprecedented sum of $406 million for the 65 percent of the team they control – a figure that was increased Friday for the second time. The deal includes a promise by the Seattle group to pay a $116 million relocation fee, the highest in league history.
The Sacramento investors, in contrast, have stuck with their original offer of $341 million.
Since the NBA's relocation committee recommended against allowing the team to move to Seattle, the Maloofs and their Seattle suitors have come up with an alternative proposal – leaked Saturday – that would keep the team here for now but bring the Seattle investors in as minority partners with the Maloof family.
The Seattle group would pay $125 million for a 20 percent stake in the Kings, and the team would play at least one more year in Sacramento while team owners attempt to negotiate with the city of Sacramento on a new arena deal.
A source familiar with the agreement, who asked not to be identified because of the sensitive nature of this week's NBA talks, said Hansen would strengthen the team's balance sheet as it enters into arena talks with the city of Sacramento. Even though Hansen has said his dream is to revive the Seattle SuperSonics, the Maloof-Hansen group would nonetheless make a good-faith effort to jointly finance an arena in Sacramento, the source insisted.
Should a Sacramento arena deal fall through, sources said, the team likely would seek NBA approval a second time to move to Seattle. The deal would allow Hansen to purchase a controlling interest in the team – at a price that valued the entire team at $625 million – within the next two years, subject to NBA approval. Those details were laid out in a memo Friday from NBA executives to team owners, a source said.
It is uncertain whether Hansen would be willing to invest time and money trying to build an arena in Sacramento after having formulated a deal for an arena in Seattle over the last two years, including spending more than $65 million to purchase an arena site, according to media reports.
A representative for Hansen declined comment about the alternative plan.
Nor is it likely the NBA would offer that group any ironclad agreement that the team could move to Seattle in the next couple of years if no arena is built in Sacramento.
Irwin Raij, a New York sports attorney and former member of Sacramento's arena task force, said it seems unlikely the league would OK the 20 percent plan, but added, "it's not inconceivable – it's not out of the question."
Raij said the NBA could be tempted by the idea of pumping equity into the ownership group. But he said fans and Sacramento officials would be extremely skeptical that the owners would make a good-faith effort to build an arena in Sacramento. "Who's going to sit down with the public sector and negotiate the stadium deal? Mr. Hansen, Mr. Ballmer. They've made it clear what they want to do, what they want to accomplish. What message does that send to the fan base?"
The backup deal adds yet another layer of complexity to what has become an unprecedented tug-of-war over the team's future.
The Maloofs "intend to be loyal to Hansen to the bitter end," the source said. They have also indicated they do not feel the Sacramento bid, headed by Silicon Valley executive Vivek Ranadive, is complete or competitive with Hansen's. Still, should the NBA reject the deals on the table with Hansen, the source said the Maloofs have not ruled out a Ranadive offer.
NBA officials have encouraged the Ranadive group to put 100 percent of its $341 million purchase offer in an escrow account. The group has already placed 50 percent of its offer into escrow. A representative for the Ranadive group declined Sunday to say if or when the group would put the rest of the money down.
The long saga enters a major chapter this week. The NBA board of governors is scheduled to meet in Dallas on Wednesday to review the Kings issue, and likely will vote on whether to grant the team's request to relocate this year to Seattle.
Before the Wednesday meeting, the league has scheduled a conference call today for its relocation and finance/advisory committees. It is uncertain whether the relocation committee will be asked to review its previous recommendation against allowing the move. The finance/advisory committee typically votes to recommend yes or no on a team sale. NBA officials have not said whether the committee might do that today.
To separate his bid from the Sacramento group's, Hansen announced on Friday he had raised it for the second time, adding $75 million in team valuation to the purchase deal he signed two months ago with the Maloofs. That would translate into $406 million for the 65 percent share of the team that the Maloofs control.
Mike McCann, a sports-law expert and contributor to NBA TV, said the late-hour push by Hansen and the Maloof looks like "an effort by the Maloofs to encourage ambivalent owners to side with Hansen." He said it is unlikely it will work, but acknowledged it is hard to figure out which way this will go. "This is a situation in flux."
Call The Bee's Tony Bizjak, (916) 321-1059. Follow him on Twitter @tonybizjak.
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