Sacramento has done all it can to keep Kings, Mayor Johnson says on eve of NBA vote
05/15/2013 12:00 AM
10/01/2014 2:11 PM
Moments before boarding a plane for today's NBA meeting in Dallas that could decide the fate of the Sacramento Kings, Mayor Kevin Johnson said "we're holding our breath as a city." Sacramento has done all it can, he said, to keep the city's major league sports franchise.
Already on the ground in Dallas on Tuesday, Kings co-owner George Maloof said his family hasn't ruled Sacramento out of the game but remains committed to selling the Kings to a group in Seattle offering a record price for an NBA franchise.
And in Sacramento, far from where the league's 30 owners will weigh whether the Kings should stay or go, a pair of attorneys and three community activists charged in a lawsuit that the city is concealing the true cost of its plan to subsidize a new arena that could cement the team's future here.
The NBA didn't say anything Tuesday – but its owners will have the final say in this saga, perhaps as early as today, when the board of governors is expected to vote on a proposal by the Maloof family to move the Kings to Seattle. A committee of owners formed to examine the relocation request recommended unanimously last month against the move.
Should the NBA reject the relocation to Seattle, the deal that hedge fund manager Chris Hansen and Microsoft executive Steve Ballmer have to purchase a controlling interest of the Kings from the Maloofs would dissolve, under terms agreed to by Hansen and the Maloofs. The Maloofs and the Seattle group would then seek league approval on a backup plan to sell 20 percent of the franchise to Hansen and Ballmer – an arrangement that would also require approval from three-quarters of the NBA owners.
A top executive with one NBA team, asked about today's meeting, said the relocation committee's vote against the Seattle move will likely be influential with the entire board of governors. That recommendation "seems to be what's happening," said the executive, who would speak only if granted anonymity.
If both deals are defeated, Sacramento officials are pressing the league to approve an offer from a group led by Silicon Valley executive Vivek Ranadive to buy the Kings and keep them here.
Speaking to The Bee from Dallas on Tuesday, George Maloof was circumspect about whether his family would seriously consider the Sacramento bid. Maloof said he is hoping to get league approval for one of his two deals with Hansen.
"Nothing against the Sacramento group," he said, "but they have a backup offer, and we have a binding agreement with Chris. That is just the way the deal progressed. We have a backup from Vivek, but we're being true to the deal with Chris."
Approached by a News 10 crew in Dallas, Maloof said his family has never ruled out selling to the local contingent seeking to buy the franchise. But he pointed to the price difference between the Sacramento and Seattle bids as a significant issue.
Hansen and Ballmer have offered $406 million for the 65 percent share of the team held by the Maloofs and their partner, Robert Hernreich. That sum translates into a value of $625 million for the entire franchise – by far an NBA record.
Ranadive's group has offered $341 million for the Maloofs' interest and has placed 50 percent of his offer into an escrow account. Asked Tuesday whether the Sacramento group would place the full offer into escrow, as the NBA has urged, Mayor Johnson replied, "We're told we need to have 100 percent in escrow, and you might as well make the assumption on your own."
Maloof, in a late Tuesday interview in the hotel lobby with reporters from The Bee and a Seattle TV station, added that Sacramento would have nothing to fear from a "backup plan" in which Hansen and Ballmer would buy 20 percent of the Kings and commit to building an arena in downtown Sacramento.
That plan would be presented to the NBA only if the relocation to Seattle is shot down by the league.
"Our intention would be to try to do an arena, for the ninth time," Maloof said, alluding to the multiple failed efforts to build the Kings a new facility over the past decade. "We've never not worked in good faith."
The Maloofs were widely criticized by Sacramento and NBA officials for abandoning a tentative arena deal in Sacramento last spring.
Maloof insisted that Hansen and Ballmer – despite their stated desire to return the NBA to Seattle – would be good partners in the effort to build an arena at Downtown Plaza. "You guys would love them – they're great guys," he said. He suggested Hansen could use a limited partnership in the Kings as a first step toward owning his own team some day, the way Ranadive is trying to use his stake in the Golden State Warriors as a springboard to taking over the Kings.
In a press briefing at Sacramento International Airport, Johnson said NBA officials have assured him that the fate of the Kings won't be decided by a bidding war, and that he doesn't "think (the team) is going to go to the highest bidder."
"I think that's something that does a disservice to the NBA if you're just going to sell to the highest bidder," the mayor said. "What would that tell every other small- or medium-sized market? That you always have to worry about your franchises."
Back in Sacramento, opponents of the city's plan to subsidize an arena filed a lawsuit in Sacramento Superior Court. Attorneys Jeffrey Anderson and Patrick Soluri allege the city has broken the law on several fronts in its $448 million downtown arena plan.
The suit contends the city undervalued the size of the subsidy it is providing developers under the tentative deal to build a facility in Downtown Plaza. The city has said it has agreed to place public assets valued at $258 million into the deal, but the plaintiffs contend the investors are actually receiving $338 million to help them afford a purchase of the Kings.
The lawsuit alleges that city officials have tried to conceal the full amount they are putting into the deal. It also contends that the public-private partnership with a group of investors amounts to an illegal giveaway of public funds.
In their suit, the plaintiffs allege that the city "concealed or suppressed material facts" and that Mayor Johnson and City Manager John Shirey "failed to disclose in the Term Sheet that they had privately agreed with the Sacramento Investor Group to subsidize its purchase of the Kings franchise."
The group argues the city did not include the value of 2,700 Downtown Plaza parking spaces it intends to allow private developers to operate, as well as the potential future value of billboard leases. It also claims the city undervalued seven parcels it is giving to the developers.
"We are prepared to defend the council decision as necessary and do not believe this lawsuit has merit," City Attorney Jim Sanchez said in a statement.
The mayor, upon arrival in Dallas, called the lawsuit "baseless" and added, "It will have no bearing" on the city's ability to build an arena.
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