If basketball fans in Seattle and Sacramento can step back from their emotions just a moment, I hope they can appreciate that they are participants in a sports spectacle more epic than anything they will witness on an NBA court.
In a showcase week for how American business truly works, the Seattle bidders for the NBA Kings answered a kickback from the Sacramento bidders with a bribe. The game grows so ruthless that soon someone will leave the gun and take the cannoli.
Friday, Seattle bidder Chris Hansen posted on his website that he increased his offer $75 million for a total valuation of $625 million, which amounts to an attempt to buy votes of fence-sitting owners who will gather in Dallas Wednesday to decide the issue.
The “sweetener” comes after the Sacramento bidders sweetened their bid by telling the NBA before the relocation vote that they will kick back its share of the league’s annual revenue-sharing once the Kings are in a new arena proposed for downtown, a sum estimated currently to be around $18 million annually for the have-not Kings.
Since we still have a few days to go, before the vote, is it reasonable to expect that we are edging closer to a virgins-into-the-volcano stage? Well, in a manner of speaking, yes.
According to a source with whom I talked by phone, who was knowledgeable of Hansen’s plans but who didn’t want to be identified, mostly out of fear of a court-ordered mental-health evaluation, “There’s more.”
Lock up your daughters.
While the speculation about motives and strategy has commenced fearsome chattering among the digirati locally and nationally, Hansen was fairly straightforward in his post:
“While we appreciate that this is a very difficult decision for the league and owners, we hope it is understood that we really believe the time is now to bring the NBA back to Seattle,” Hansen wrote. “It is paramount that we do everything we can to put Seattle’s best foot forward in this process.”
To me, that means Hansen is not putting stock in either of two alternatives that have been objects of speculation since Hansen was denied in a 7-0 vote two weeks ago by the NBA’s relocation committee: Litigation or expansion.
He doesn’t want this purchase and arena project to be delayed. Period.
Doesn’t want to sue. Doesn’t want a promise of expansion in a year, or two, or three. He wants the Kings.
Right. Damn. Now.
I get that. If he is denied, he knows that the blow will be equally damaging financially and emotionally. The threat is real that he will not be able to re-assemble for a second try the personal, public and political energy that the current project has gathered.
With Mayor McGinn, a solid Hansen supporter, up for re-election this year in a field of seven, there is no guarantee that his tenancy will survive the primary Aug. 6. If it does, he has to get through general election Nov. 5.
As important, marshaling public passion for a third joust over an NBA franchise after being hosed twice in five years seems daunting at best. At least right now. What they do have right now is a signed purchase and sale agreement with the family that owns the Kings, and a lot of money.
So the motive for the latest gambit is plain. What about the strategy?
Sacramento Mayor Kevin Johnson was quick to dismiss the latest twist in the saga, reiterating NBA Commissioner David Stern’s point in February that the outcome “would not be dictated by a bidding war,” he wrote in an email. Well, after the kickback by the Sacramento bidders, it’s a little late for that now, yes?
Johnson continued that the issue has always been about Sacramento’s ability to create an ownership and an arena that “ensures the franchise can rebuild and thrive.” That’s true, but as recently as this week, two sources familiar with the situation said that the Sacramento bidders were still soliciting more investors to join. And the Sacramento Bee reported this week that the NBA has “encouraged” the Sacramento bidders to put in 100 percent of the cash that would go to the Maloofs into an escrow account. Hansen’s $525 million has been in escrow for some time.
The NBA has a reasonable apprehension that the commitment to continue in Sacramento, especially with the downtown arena plan in its infancy, will not work, given the remaining obstacles as well as the haste with which it was assembled.
On the other hand, Hansen’s first increase in the bid price, $25 million, was “not recognized” at the Board of Governors meeting April 19, according to the same source, ostensibly because it wasn’t part of the original purchase and sale agreement signed with the Maloofs in January. Whether that was a procedural matter or a genuine disqualification isn’t known, but the tactic could provide a workaround for the anti-Hansen crowd.
The big unknown is whether the new, $625 million valuation will move the needle to Seattle for some owners, only 16 of which are needed to approve relocation. The source said the original vote by the relocation committee was 4-3, but the dissenters were asked to throw in their votes for the sake of unanimity.
Hansen’s new increase, if accepted, for the 65 percent share the Maloofs own means the sellers would gross $406 million, compared to the $341 million asked from the group led by Silicon Valley billionaire Vivek Ranadive. Even for the mega-wealthy owners of the NBA, that difference is significant.
Unpopular as are the Maloofs, they remain members of the lodge, and $65 million is $65 million — a windfall upon windfall no owner would have anticipated as recently as early January, only a year removed from a lockout.
As much as owners love the principle of supporting smaller markets and would like to hug the pro-Sactown Stern at every turn, $65 million is, as has been suggested, $65 million.
One strategic virtue of the increased offer is that it may force owners to at least allow the vote on the sale, which requires three-quarters (23 of 30) approval. That would allow an airing of the choice between principle –or, as Johnson put it recently at a press conference, “the high road” — and pragmatism.
In 2008 with the Sonics, the owners ignored principle and went with the pragmatic move to Oklahoma City. We shall shortly find out if they’ve taken the cure — at Seattle’s expense.
In the meantime, more drama will unfold. All that we ask for is no horses’ heads in beds. It’s been done.
75 Comments
It would not surprise me if Sterno delays the vote AGAIN, claiming that the league needs to review all points when in fact they’re trying to line up more investors. I doubt that all the owners support Sterno’s boycott of all things Seattle and are talking among themselves. Remember, during the lockout it was reported on all the financial problems the NBA was having and here they are prepared to turn down more than half a billion dollars for a significantly lower bid. Both the NBA and KJ have been increasingly more vocal in the past week on how Hansen needs to walk away and we see why: they can’t touch what Hansen is doing. He’s countered every move they’ve made and then creates one they can’t match. As far as I understand things, the NBA can recommend the Maloof’s accept SacTown’s bid but can’t force them or else it becomes interference in the free market. They could argue that they have the right to make moves they believe are in their best interests and deny Hansen based on the passing of I-91 and claim Seattle doesn’t support the NBA but then the only recourse is for the NBA itself to buy the Kings from the Maloof’s for the price that Hansen offered and I doubt they want to do that. And I-91s passing was in response to the NBA’s management not the NBA product. Of course, the NBA itself will never be accountable for it.
I can see some owners (Allen? Cuban?) working behind the scenes undermining Sterno. He’s gone next year so what do they care? And sometimes I think the game/league has passed him by. He forgets it isn’t the 1980s anymore and Carmelo/Lebron can’t hold a candle (or cell phone) to Magic/Bird no matter how hard they try to market them that way.
You don’t think he would be okay with being promised an expansion team? That would at least allow him to start building the arena. And then he might not have to spend a season or two in KeyArena.
Not that I expect that to be offered, but I find it hard to believe that Hansen wouldn’t take expansion if it were.
No. Hansen has everything in place right now. He has an agreement to use Key Arena until the new arena is built. He has a ticket base. I’m betting he has Nate McMillan lined up to be coach. If he has to wait 2-3 years for an expansion team he loses money. This all would be over and done with if Stern didn’t start all his behind the scenes moves. Hansen would be preparing for the draft and looking at free agents if it wasn’t for Stern.
But a new arena brings the NBA AND the NHL, right? I don’t know how certain the NHL thing is (will we take a current team or will there be expansion?) but if we have to wait a couple years for an expansion NBA team but we get an NHL team next year Hansen will make money off that.
Hansen and his group have close ties to Phil Jackson. Word in LA is that if Hansen gets the Kings, Jackson is inserted as VP of Ops and he hires Brian Shaw as coach. Phil would then mentor Shaw a la Tex Winter.
Jackson keeps getting brought up. The Kings have Geoff Petrie running things and he’s a two time Exec Of The Year. I don’t have a problem with him staying on, especially once he gets Ballmer money to work with. He’s had the purse strings tightened up on him the past five years.
Anything that taint’s Stern’s legacy and causes him any embarrassment and loss of influence is great by me. I feel bad for Kings’ fans, and I have a weird feeling something amazing is going to happen next week.
This is getting way too Lewis Carroll’s, “Through the Looking-Glass”. At some point I expect the Hansen group to place a bid on the City of Sacramento, their train museum and their zoo.
“In 2008 with the Sonics, the owners ignored principle and went with the pragmatic move to Oklahoma City.”
Do you honestly not recognize the difference that in 2008 there was no plan for a new arena in Seattle, while now there is a plan for a new arena in Sacramento? Do you think that Bennett would have been allowed to move the Sonics to OKC if Seattle had the same deal for a new arena back in 2008 that Sacramento has now?
I don’t understand how anyone can not see that as the difference maker in the two situations: Seattle did not have any deal for a new arena back in 2008; Sacramento has a deal for a new arena now.
Do you honestly not remember that there were several potential spots being considered including one on the Muckleshoots offered for free that didn’t pass Bennet’s muster. How could there have been a “plan” when the owner’s criteria was so narrowly defined given their plan to move the team all along? I don’t recall either, the NBA vetting the OKC ownership situation and potential move in anything close to the same way Hansen’s group has. Yeah, I know Stern went to Olympia to lobby and got in a tiff with Frank Chopp. Big deal.
Ironically, now Seattle’s arena “deal” is way more solid than Sacramento’s yet it may not be enough. We’ll see how many favors are owed Stern in the next few days.
Potential arena sites is not an arena deal. The arena deal is the tax revenues to pay for it, which Sacramento has on the table now, but Seattle did not have on the table in 2008. Stern himself went to Olympia to lobby for tax revenues for a new arena, and was told to get lost. Try to tell Stern that there was a deal for a new arena in Seattle back in 2008. I suspect he would disagree with you.
Here is the pdf file of the Stoparenasubsidy group in Sacramento, which has organized to collect signatures to put the arena proposal on the ballot in Sacramento:
http://stoparenasubsidy.com/stoparenasubsidy.com/news_files/EyeonSacArena.pdf
Bennett required the arena deal was 75 to 80 percent taxpayer financed and bolted as soon as he could break the lease.
At the very least Hansen has been upfront since day one…
Bennett was actively undermining any new arena deal the whole way through. He was demanding a 500 million dollar new arena that was funded 75% by the taxpayer. He attempted to make any new arena deal as unpalatable as possible to the public and he succeeded. It’s hard getting an arena deal when the owner of the team isn’t willing to play ball, unwilling to rally the troops, averse to making the necessary local civic connections necessary to foster the political will to do so.
Seattle had a lease that ran for two more years, though. Sacramento has no lease. And there was all the evidence of Bennett’s lies and bad faith. The owners and Stern chose to ignore all that.
It was all about the arena. Seattle had no plans for a new arena. Sacramento does. In fact, Sacramento had plans for a new arena a year ago that the Maloofs and the NBA all agreed on, but which the Maloofs backed out of. So, this is twice in the last couple of years that Sacramento has committed tax revenues towards a new arena.
Sacramento has a non-binding term sheet. That’s hardly an arena plan.
It is absolutely an arena plan. And it was voted on and approved by the Sacramento city council. Ask Stern if Sacramento has an arena plan, or not.
The current owners had to agree to it and the Maloofs did not because they already had plans to sell. They tried Anaheim but that was never gonna work with 2 other teams in the same market. Just shows you the poor economic leadership ability KJ has a mayor. He really has non idea how to run a city, he`s more of a celebrity community organizer. There are so many sweetners, tax loopholes and kick backs fueling that Sac group and most Sac residents have no idea. Who pays for it? The 30k year struggling single mother living in section 8 housing as local sales tax and other fees are increased to subsidize KJ and his billionaire buddies. KJ is a coat tail rider. He never built anything in his life. He became mayor on his NBA celebrity status but he has a scandoulous and unethical past. Being dirty only works within your social class or lower.
The Maloofs did agree to it. They backed out when it was time to start performing. There are no sales tax rate increases – the plan will pay for itself with city arena revenues, increased parking revenues due to the location of the arena, increased property taxes with increasing property values, increased sales taxes because of more business in the city, increased hotel taxes from the fact that more concerts and other events (NBA All-Star game, return of NCAA) will be held in Sacramento (performers, etc. will need to stay overnight).
The parking revenue part is BS! There is no way parking is gonna raise the $ they are projecting. That is pie in the sky.
Stern doesn’t mean s***. That’s what you’re missing. The deal still has to pencil, and Sacto doesn’t have the TV revenue to compete with Seattle.
Hansen just played the player. If the NBA votes no, it’s not Hansen who will sue. It’s the Maloofs. And they’ll win.
can sactown really afford to pay for a new arena, please
Clay Bennett only wanted to stay if he could get a $500 million stadium, completely publicly financed. No one would think that’s a smart deal
Testing the theory, money talks and bull sh_t walks?
If the owners vote to not allow relocation, then they don’t have to vote on the sale any time soon. If the Kings are not going to be moving, then the sale decision is not urgent. If they do allow the relocation, then they need to vote on the sale immediately, to give Hansen time to get things set up in Seattle for the start of the 2013-14 season.
So, if relocation is not approved, the NBA may not vote on the sale for several months. Certainly, Hansen has changed his offer significantly enough that the NBA can easily say it needs more time to consider it, since it has changed so much in just the past few days. That would give the Sacramento group time to get more investors, if they are interested in doing that.
The Ranadive group could try to put some “poison pills” in its offer, that Hansen might be reluctant to match. Like maybe promising to keep the Kings in Sacramento for five years or more, even if the new arena is not completed in that time. And the NBA could say Hansen had to match that or the deals are not comparable. It will be interesting to see how much Ranadive really wants to buy the Kings, and how creative his group is in making an improvement to their offer that Hansen won’t want to match. Hansen has Ballmer’s money. What can Ranadive come up with, if anything?
Another question is does Ranadive or Sacramento have any grounds for a lawsuit if the NBA allows the Kings to leave Sacramento even after the city did everything the NBA asked it to do to keep the Kings?
But, this latest increase by Hansen does make it seem more likely that the NBA will allow him to buy the Kings. Unless Ranadive matches…..
The Greater Fool Theory being played out right before our eyes.
Buyer’s Remorse, anyone?
under the league’s bylaws, they have to vote no more than 120 days after a proposed sale. so no, the league cannot delay the sale for several months. and Ranadive cannot do anything, since they have no deal with the Maloofs at the moment. all they have done is accrue some money in escrow to show they are capable of making a deal, but nothing more.
But, this is a new proposal, just proposed by Hansen today. If Hansen keeps making changes to the proposal, it pushes the start of the 120-day period back. I would say the NBA has clear right to contend that they have 120 days from today, which is when Hansen made his latest proposal. The proposal he made back in January was a different proposal, for less money. Then NBA makes the rules on this.
i may be wrong on this, but from what i understand, the ability to raise the purchase price was written into the original PSA, so it would not be a “new” proposal.
NBA bylaws are not actual bylaws. Merely guidelines. There’s no real penalty if they aren’t adhered to. Just look at how many times various deadlines have been extended during all this.
yep. it’s called an ”escalator clause”.
They also added a clause about revenue sharing. That is a new proposal.
No it is not new….it is additional money added to the original sale proposal.
Lock up your wives, lock up your back door and run for your lives!…………………….It just doesn’t get any better than this, a control freak egomanic losing control. As much as I don’t want to do to another city what Stern did to ours to fullfill his promise to Bennett, it would be nice to slap him back in front of everyone!
Hansen is being charged a $100M honesty tax. He could have just followed Bennett’s example, kept his mouth shut, bought the Kings for the $525 under the false pretense of keeping them in Sac, sabotaged the team and every attempt to build a Sac arena and then moved them to Seattle after the sale was approved.
As a Seattlite I appreciate that Hansen has been TOTALLY upfront about his attentions the whole time, but dang is the league making him pay for it.
And the plot thickens. This drama ain’t even close to finished.
And if Sacramento opts to challenge that bid, Hansen’s going to pull out all the stops with his next figure.
http://youtu.be/nhk9eVt8rJk?t=13s
Wow. Seattle fans seem to eat too much verga lately. That’s ok, keep eating verga. Maybe one day it will make you smart and understand that you will not get the Kings. The Kings will stay put because they have the support of the city and a great investor team. The Magoofs just want to sell the team and move on. They don’t care who they sell it to. They want out of the league, and the league wants them out too. They just want to get as much money as possible. And by the way, there are reports stating the Hansen is pissing off some owners. I know it’s a lot of money, but instead of helping him, it is not. If the Kings are worth that kind of money, can you tell me how much money celtics, lakers, knicks, chicago, miami, might be worth now?
Thats why they have said constantly that they wont sell to Sac investors… SMH
wtf is verga?
They obviously don’t have a better investment group quit the wishful thinking
What on earth could Hanson be possibly be doing to “piss off” the owners? I have NEVER met any decent business man who is “pissed off” when I am offered more money!
I think that the suspense and transparency of this deal are “pissing” off t all of us in the peanut gallery.
Externally the NBA has said the that Kings stay because of fan support, and arena deal and potential ownership group.. However internally we find out the Ranadive had to make some concessions… So not matter how the result is publicly spun it will come down to negotiation…
Yeah, I know when people offer me tens of millions of dollars that I didn’t ask for, it only makes me angry. The nerve!
Why would any owner be pissed off that the value of his franchise is going up as a direct result of Chris Hansen? “Damn it, Hansen! Now, what am I supposed to do with all this cash!” Yeah, that sounds like a sports owner to me.
Hansen is really in a lose-lose situation now. If he gets the Kings, he has paid way too much for them, and he has given up any revenue-sharing. So, if the Kings stink in Seattle and nobody goes to the games, Hansen can lose boatloads of money every year, just like Howard Schultz did.
And if Hansen does not get the Kings, he has set the price for an expansion team, or some other team, at around $625 million.
Thiel is fond of pointing out that the NBA’s new collective bargaining agreement supposedly guarantees every NBA team can make money, or at least not lose money, because of more revenue sharing. But, Hansen just gave that away. So, Hansen can indeed lose money operating the Kings in Seattle. In fact, Hansen can lose a ton of money operating the Kings in Seattle. And if that agreement is binding as long as the Kings play in Seattle, as Hansen said it would be, that really lowers the value of the Kings as long as they are in Seattle, should Hansen ever want to sell them.
So, Hansen will have paid way too much for a team, while lowering its value by giving away all revenue sharing he might have gotten.
This seems like a real lose-lose for Hansen.
Maybe the NBA will let Hansen buy the Kings for that ridiculous price, and move them to Seattle, then offer Ranadive an expansion team at a price Ranadive can afford. It does seem unlikely that the NBA would deny the Maloofs the opportunity to make such a killing on the sale.
You are not including the value of the NBA’s TV contract. The home gate almost doesn’t matter anymore, given the size of the present and future contract with the networks.
That is just ignorant. If the “home gate almost doesn’t matter any more”, then why are owners so insistent on getting new arenas? With 18,000 seats times 41 home games per year that comes to about 750,000 tickets per year. At an average of $75 per seat that comes to $56 million per year in ticket sales. Add another 1/5 on top of that for concession revenues and you get $66 million per year. $2 million for parking brings it to $68 million/year. Then luxury suites leases at new arenas should bring in at least $20 million per year, and probably a lot more. So, at $20 million, that brings arena revenues to around $88 million per year. Then you have arena advertising and naming rights for a few million more, bringing the total to well over $90 million per year from an arena. In major markets, arena revenues are far above that.
In 2012, total NBA revenues were about $5 billion. $930 million of that was from national tv, which means that less than 20% of the total revenue came from national tv. Each team got about $31 million per year from the national tv deal. That is far less than successful teams get from their arenas.
All that matters in regards to attendance is filling the suites. Seattle has tons of businesses lined up on a waiting list. Ask the Mariners.
The Mariners have leased only about half of the luxury suites in Safeco Field this season. Ask the Mariners what?
And ticket sales and concessions is a lot more revenue than the luxury suites.
Sonicsarena.com “we have also guaranteed to the NBA that the Franchise would be a revenue sharing payer in all years in Seattle.” Get your facts straight its Sac that is giving up revenue sharing after they move to a new arena.
I don’t know what you are trying to say, but Hansen just agreed that the Kings would never RECEIVE any revenue sharing money as long as they play in Seattle. What “facts” do you think I got wrong?
You have almost all your facts wrong. First off, the Sacramento City Council did NOT vote to approve an arena plan nor did they vote to commit any “tax revenue” as you said. The council only voted on a “non-binding term sheet” for an arena and still must vote on an actual plan…once a detailed plan actually exists. Secondly, most of the city’s contribution comes from selling off 35 years of parking revenue, not taxes. There is already a legal filing against both the term sheet and the funds. Further, the last arena deal was overwhelmingly killed by the voters in Sacramento, not the Maloofs. Finally, as an front office employee of a AAA baseball team, I can absolutely tell you that ticket sales are NOT the primary financial force behind any major sports franchise. You are totally ignorant to our finances. Heck, the Kings BOUGHT THEIR OWN TICKETS just to announce sellouts. Why? Because many times attendance is more about ancillary benefits (league revenue terms, marketing valuation, advertising terms, etc) than ticket revenue and parking. Every team has different strategies and different goals, but putting people in the stands is almost never the number one objective. And how the heck you can ignore the fact that the Kings currently have the WORST attendance in the NBA, have a terrible team and yet people are bidding to pay half a billion dollars. Even the “Sacramento investors” are arguably “overpaying” for a team by your logic. In the end, Pro sports teams tend to be excellent investments in terms of long-term capital gains.
Can Hansen be ok’d to buy the team yet NOT be approved to relocate the team?
That may be the initial outcome, which I presume he would reject, leaving the team to the investor group in Sacramento.
It was a valiant try by Hansen, but frankly, he put the cart before the horse. He should have gotten NBA approval to relocate prior to making his bid and purchasing the property, which he could have negotiated a purchase option for.
It seems Hansen thought if he lined everything up securely, in advance, it would cause an investor group in Sacramento to go away and essentially force the NBA to go his way.
I suggest he get NBA approval, in advance, next time.
If this was a slam dunk purchase and move the NBA might vote for purchase first
and relocation second.
I have to admit the NBA is using their own process for maximum benefit. By cultivating a counter offer from Sacramento and staging the relocation vote first they have been able to extract some major concessions. Clearly revenue sharing is a huge issue and as a result of their actions have removed one team from revenue sharing and possible have another team that is a revenue contributor.
Stern has said that this won’t be a bidding war… But he didn’t say that there aren’t other negotiating points!
Ok, no horse heads in beds…. what about a beheaded salmon? That hasn’t been done, has it?
If they let Hansen buy the team, but not relocate, he can just run the team into the ground – which is not a far distance – and request relocation again. That is the traditional way these things are done.
no he would just wait for sac to come up with the new arena, and when that doesn’t happen…
The league’s position has always been it takes a new arena to fight off relocation. This stance aids all the owners in that it gives them leverage to extort goodies from their communities. Sac. already came up with one arena deal that the Maloofs backed out of. Now sac has another arena deal. It is not written in stone, but neither is Seattle’s, although Seattle’s is further along. You give Seattle the team even though Sac coughed up the arena, who knows what kind of message that sends NBA communities like Milwaukee.
Add to that the fact that the owners (who vote) don’t get anything from the extra money Hansen has offered. If seattle leaves, they may get relocation money, but did Hansen increase that or is that going to be less than the King’s kicking revenue sharing?
On top of that, I’m pretty sure Stern dislikes the douchebag Maloofs. Remember they backed out of the previous arena deal set up by stern and sacramento. I imagine that Stern would love to punish the Maloofs. It has always been his MO to punish those who defy him, as Seattle well knows.
So, it seems to me, that the owners and Stern get a more from a deal from the Kings. The only thing that would give the pause is the fear of a lawsuit, and maybe the capitalist ideology that all those rich a–holes probably live by. Although we all know that when profit comes up against ideology, profit usually wins.
I thought Sonicsgate was a great documentary but i cant wait for the release of this thriller…
What part of no does Mr. Hansen (and the Seattle media) not understand? The league already said this is NOT a bidding war. I know his heart is in the right place, but He’s acting like a spoiled rich kid who is trying to buy a date to a dance when the girl has already said loud and clear “I’m not interested!” I highly doubt the owners will vote against the committee which voted almost two weeks ago 7-0 not to move the Kings out of Sacramento. Seattle (and Mr. Hansen): I know you are bigger, I know you are better looking, I know you are richer, but moving a team out of a market where they are supported just to fill a void where you were wronged five years ago doesn’t make things right. Come Wednesday there’s going to be a lot of very disappointed people in Seattle.
Turns out not to be the case. Stern only said he “didn’t think it would turn into a bidding war”, not that it couldn’t.
only, according to the story…the vote was 4:3. That is certainly NOT a 7:0 vote. That tells me that the story is yet to be told…
You’re under the misguided assumption that the league can dictate the terms in a bidding war.
It’s pretty simple. The league can say no to relocation, but if they say no to a sale, they risk anti-trust, which decimates any control they have in the future. If they try and force the Maloofs to take an offer that is $100 MILLION less, it’s the Maloofs that will sue. And they’ll win, because this is America, and no bureaucrat or board forces you to take a $100 million hit for the sake of collective popularity. The NBA is a league, a consortium. It has no legal authority to dictate prices or team value. Hansen just did that. Either Sacto steps up to the new amount or they lose. And they’re just not a strong enough market to compete.
Game over. Y’all just don’t know it yet.
You don’t really understand franchise law very well. When you buy a team you enter into a franchise agreement, which is a set of rules that you agree to be bound by in return for all the goodies that the franchisor can provide: in this case, games with other NBA teams, tv money, the NBA brand, etc…. The two rules that are really important here are that selling or moving a team requires approval of the owners. The NBA (the owners) may not be able to force the Maloofs to sell but they can prevent them from selling and they can prevent them from moving, which is powerful leverage over the Maloofs who desperately need money.
The Maloofs can try to sue, but remember when they bought the team they signed a contract stating that ownership had to approve moves and sales. And also, remember, they need money and Hansen needs a team soon or the arena deal in Seattle might fall apart. The NBA, with very deep pockets can drag the suit out for years while the Maloofs go bankrupt and Hansen’s arena deal evaporates. If Hansen sues he also likely ruins his standing with the NBA. If he loses he will never get another team. I don’t think anyone wants to sue. It will just come down to the owners best interests and ideology.
I understand franchise law just fine; I’d had a few when I made my comment, so hyperbole got involved. Regardless, your response is pretty illogical.
The league is dangerously close to tampering right now. It really doesn’t want a Maloof-owned team, but it can’t force a sale. If your example above came to pass, it’d be much worse for the league than the Maloofs. Why? Because it means the Kings would take the maximum revenue-share under the current collective bargaining agreement in perpetuity.
It’s awfully hard to get 29 owners to sign onto a guaranteed cash bleed for years in an effort that also results in keeping team values artificially lower than what the market will bear. And ultimately the NBA isn’t served at all by the Maloofs going bankrupt and Hansen’s deal evaporating, because it takes all the pressure off of Sacto to perform and build the fancy arena. So their alternative is to… what? Force an owner to take less than market value now? Every owner who thinks they might want to sell their interest in their lifetime is thinking that one through awfully hard.
It’s one thing if the offers are comparable. It’s another when the Seattle offer is much, much greater. $100 million is much, much greater. The war of attrition you say the NBA will win effectively poisons the well for any future team sale. No owner is interested in that – especially for a Sacto “plan” that is basically on the back of a napkin.
I have no idea what is going to happen, but it is not game over. The league has a by-law that lets them take a team from owners who are damaging the league. The could pay the Maloofs off then sell to the Sac dudes. They could just vote to deny relocation and approve the sale. Would Hansen still want the team. They can do all kinds of crap. They bought the team in New Orleans and held onto it until an owner appeared. The leauge has more leverage than the Seattle group. They have the by-laws in place that give them all the power. The only thing Seattle has now is threat of a lawsuit. Law suits take years. No judge is going to order Kings to move while the suit is litigated because then what it the league wins, the team moves back? The judge will maintain the status quo until the case is decided. That means the Kings are in Sac for years still. That is not a very attractive outcome for Hansen and Ballmer. And the Maloofs can’t sue because they need money now. I’d be very surprised if anyone sues. it’s way to costly and risky. It’s going to be something else. Some kind of compromise or rules based manuever. Maybe Hansen and Ballmer are promised the next available franchise be it expansion or Miwaukee or smething. Or maybe Stern dares them to sue. Whatever it is, it’s not a done deal, and actually would be very surprised if the Kings move.
New Orleans is a bad example. They couldn’t find an ownership group and it was going to go for a fire sale, so Stern convinced the league to buy the team for the good if the overall product. And that went over well, didn’t it? Here you have a signed P&A and a very much superior offer.
The NBA isn’t Stern. The NBA is 30 ownership groups, who’s initial position was a 4 to 3 vote, and who will be locked into less money by going w/ Sacto. The NBA’s leverage now depends on tacit agreement among those 30 to get less value. Also awfully hard to force a sale saying that the Maloofs are damaging the league by getting top value for their team. I think $60+ million is enough to drag it into court, apparently you don’t; I agree that the downside is so high that the chances are low.
At some point the money talks. Apparently you think we’re not there yet. Fair enough; personally, I’ll follow the money rather than pronouncements from KJ, Stern, or anybody else.
I have said all along that it will come down to the owners interests and ideology. Beyond that, I have been reading other things that suggest that the NBA learned from the San Diego episode in the 80s and did things in the by-laws and the way they did business to protect themselves from anti-trust suits. There have actually been more anti-trust/sports league losses since San Diego than there have been wins. But this is all just speculation. I also read that the NBA by-laws are secret, so we don’t really know what is in them, and anti-trust law is really complicated, especially when you have a non-traditional business like a sports league. I apologise for saying you didn’t understand them well. I don’t either.
But I still don’t think anti-trust is a likely option and therefor feel like the NBA has more leverage.
Anyway,we’ll find out in the next few days. What do you think should happen? I lived in Seattle for 15 years and was really pissed off at stern and the NBA when the sonics left, but I have been reading more about it lately and I think that Stern made things pretty clear to the state that there had to be public subsidy or they would vote to relocate. And then the state and the voting public said no. If they had come up with some cash the sonics would still be there. It’s extortion in a way, but it out in the open and pretty much the same kind of extortion business use on communities all the time (Bennett is still a lying asshole though. I have no respect for anyone that would repeatedly lie in public and in court like that. And schultz is moron). So basically, I think if the people and politicians of Sacramento want to pay to keep the kings, they should, no matter what the offer from Seattle.
No judge is going to throw out the Maloofs case of “torturous interference” because of a league “guideline” in their constitution.
The NBA is a business not a game. This has been re-enforced by the Supreme Court to the NFL, NBA, and NHL over the years. American Needle vs. NFL was the latest instance.
The NBA does not operate above the law of the United States. The NBA cannot force the Maloofs to sell to anyone. Nor can they legally block the sale to Hansen or force a sale at a lower price….That is the definition of tortuous interference.
Dusty above is correct….the NBA is teetering on dangerous ground and even with a anti-trust exemption they might be still in hot water in a legal stand off if they turn down Hansen’s sale.
The fact it was 4-3 says the room is divided. If a majority vote to move the team it is over for Sacramento. Remember, if teams abstain then it is still just simple majority of those who do vote.
My bet is the NBA allows the sale to Hansen.
Sacramento has failed for a new arena so many times its ridiculous. The Rail Yards, Natomas, Cal Expo, and their current plan was deemed not feasible in 2004. Now all of a sudden it is?
This on top of the fact Hansen is offering 65M more and has an arena plan on far more solid footing than Sacramento. Plus a 115M dollar relocation fee? 4M to each team? How many people would turn down 4M for free just for principle?
The Kings are done in Sacramento, if the Hansen sale does not go through and Ranadive gets the team he will fail for a new arena as well and he will look to move the team to San Jose CA where he can watch the games in his backyard.
Looks to me like Hansen is becoming a financial bully that is trying to force the NBA to give him what he wants…….maybe he should just buy the NBA!
This is desperation. Hansen’s bid isn’t even a concern to the Sacramento investors. is sac capable of supporting an nba franchise? that is still the only question being asked, and the answer is still YES. the nba will not allow a sale to Hansen after relocation is officially denied knowing that he wants to move the team. the best hope for seattle now is expansion in a few years, or another owner will see how much cash Hansen is throwing around and decide to sell, but that unfortunately would run you guys through all of this drama again next year. i really hope you guys get expansion, so you guys and another city dont have to deal with all of this again.
Carmichael Dave?
so why is the relocation committee meeting on Monday again?
is Sacramento really ready to pay for a publicly funded arena?
I am curious what side of that 4-3 vote Clay Bennett was on?