Business & Real Estate

After leaving Sacramento, Maloofs eye a sports comeback

Gavin and Joe Maloof, then co-owners of the Sacramento Kings, watch their team play the Utah Jazz in 2012 in Sacramento.
Gavin and Joe Maloof, then co-owners of the Sacramento Kings, watch their team play the Utah Jazz in 2012 in Sacramento. Sacramento Bee file

They left Sacramento with bull’s-eyes on their backs and nearly a quarter-billion dollars in their pockets.

Now the Maloofs, back home in Las Vegas, are ready to launch their comeback as major league professional sports owners.

Barely a year and a half after ending their unpopular tenure as owners of the Sacramento Kings, the Maloofs are minority partners in an attempt to secure a National Hockey League expansion team for Las Vegas. The effort gained momentum last week when NHL Commissioner Gary Bettman gave the Maloofs’ lead investor, a wealthy Florida insurance executive named Bill Foley, permission to conduct a season-ticket drive to gauge fan interest in the city.

Foley, in an interview with The Sacramento Bee, called the Maloofs “very honest, trustworthy people.” He said Joe and Gavin Maloof first approached him about a sports investment approximately two years ago, while they still owned the Kings.

The key to the NHL effort is that Foley is in charge. In his announcement last week, Bettman referred only to Foley and made no mention of the Maloofs. League watchers said the NHL would probably be comfortable with the Maloofs as long as they’re junior partners.

“Foley will be the controlling owner of this team,” said sports-team broker Tony Tavares, who has known the Maloofs for years and is former president of NHL teams in Anaheim and Dallas. “My gut sense is it would be more of an issue if (the Maloofs) were going to be majority partners.”

It’s not as if the Maloofs are unknown to the NHL, however. Foley said the Maloofs accompanied him when he held his first meeting with Bettman, at an NHL owners’ meeting in Pebble Beach a year ago.

Still, Foley has made it clear to the NHL that he would run the team. “The buck will stop with me, and the league has said they feel that’s the way to go,” he said.

Asked about allowing the Maloofs into the NHL, league spokesman Frank Brown said the question was “way too premature.” The Maloofs declined to comment through a family spokesman, Troy Hanson.

When the Maloofs’ potential involvement in the NHL became public several weeks ago, some sports-business experts were skeptical that the family would be allowed back into big-time pro sports. The Maloofs’ last few years in Sacramento were marked by declining attendance and attempts to relocate the franchise to Anaheim and later Seattle. The family angered Sacramento city officials and then-NBA Commissioner David Stern by backing out of a tentative deal in 2012 to build a new downtown arena. Joe and Gavin Maloof, once familiar figures in their courtside seats, stopped attending games at Sleep Train Arena during their final year of ownership.

“It was pretty ugly,” Foley said with a chuckle, adding that he was only vaguely aware of his partners’ difficulties in Sacramento. “They felt they got beat up pretty good.”

Foley said he would lean on the Maloofs, who’ve been in the casino business in Las Vegas for decades, for help with ticket sales and marketing.

“They’ve been in Las Vegas a long time. They’re very well connected in the community,” Foley said. “They’ll have no trouble selling tickets in Las Vegas.”

The Foley-Maloof group expects to have a place for its prospective team to play. Foley said he’s spoken multiple times with representatives of MGM and Anschutz Entertainment Group, or AEG, the partners in an 18,000-seat arena under construction near the Strip. The arena is scheduled to open in 2016.

AEG was scheduled to operate the Sacramento arena proposed in 2012 – the deal abandoned by the Maloofs. The company didn’t respond to requests for comment about the Maloofs’ investment in a potential tenant for AEG’s Vegas arena.

The Maloofs were still NBA owners when they approached Foley approximately two years ago, inquiring about his interest in investing in pro football, he said. Foley turned them down, saying an NFL investment would be prohibitively expensive. “Two, three months later, they called back and said, ‘What about hockey?’” Foley recalled.

While the going price for a football team would probably surpass $1 billion, hockey is more affordable. Drew Dorweiler, head of a Montreal sports consulting firm called Dartmouth Partners Ltd., said an expansion team would probably cost $400 million.

Foley was intrigued. The executive chairman of Fidelity National Financial Inc. of Jacksonville, Fla., the nation’s largest title-insurance company, he controls a fortune estimated by Forbes magazine at $600 million. He owns resorts from New Zealand to Montana, and a string of wineries including Sonoma’s Sebastiani Vineyards.

At the time, the Maloofs were working on selling the Kings, according to Foley. When the NBA vetoed their plan to sell the team to investors from Seattle, the family accepted a buyout in May 2013 from the group led by Vivek Ranadive.

The sale valued the franchise at a total of $534 million, including debt assumption. The Maloofs’ share came to $236 million.

It’s not surprising that the Maloofs were already plotting a return to major league sports; owning a team is practically in their blood. The Maloof brothers – Joe, Gavin and George – learned the business as young men, when their father bought the Houston Rockets in 1979. The family sold the Rockets in 1982 but the brothers were almost always on the prowl for new sports investments. They came close to buying the NHL’s Tampa Bay Lightning in 1997 but backed away because the franchise was a mess financially.

“The losses were a big concern,” Gavin Maloof said at the time.

In 1998, the Maloofs came to Sacramento. They bought a minority share in the Kings and purchased controlling interest a year later.

Even as their attention turned to the NBA, however, they maintained connections to hockey. The brothers frequently attended Anaheim Ducks games. And from 2009 to 2011, the family-owned Palms Casino in Las Vegas hosted the NHL’s annual awards ceremony, bringing some celebrity glitter to a sport that sometimes hungers for attention.

Las Vegas had a franchise in the minor-league East Coast Hockey League until this season, when the arena’s owner refused to renew the lease and the team was put on hiatus. The team drew an average of 4,600 fans per game last year, roughly in line with the league average.

Whether Vegas will get an NHL team remains an open question. The city is believed to be competing against Seattle and Quebec City, according to Dorweiler.

Major sports leagues have been reluctant to go into Las Vegas because of fears that players would fall under the influence of gamblers. Bettman, in announcing the NHL’s blessing for the season-ticket drive in Las Vegas, said the league is just starting to examine the potential candidates and “there is no formal expansion process.”

Foley, though, said he thinks Bettman’s approval of a season-ticket drive is “a great first step” toward getting a team. He said he believes the marketing will begin sometime in early 2015.

“We’ve done a lot of homework,” Foley said. “We need to show (the NHL) that Las Vegas is a viable hockey town.”

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