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Kings Arena Update: Kevin Johnson working with Ron Burkle’s right hand man


The Sacramento Kings arena saga took an interesting turn on Wednesday when it was announced that the Maloof family had given up majority ownership of the Palms Casino after a “recapitalization agreement” with their main creditors, TPG Capital and Leonard Green and Partners. The deal reduces the Maloof’s ownership from about 80 percent to 10-20 percent, but the Maloofs will continue to operate the casino.

The recapitalization agreement doesn’t come out of nowhere, however, as Bloomberg News and many Las Vegas outlets reported in January that there was a strong chance that this would happen, though the Maloofs refused to acknowledge that they would sell or that the Palms was in trouble.

Meanwhile, on Monday, Mayor Kevin Johnson announced the identities of the 70-person Here We Build committee, named after the grassroots movements created by Blake Ellington of #HereWeStay, and modified into #HereWeBuild when local radio personality Carmichael Dave created a pledge drive for the ages.

And if you’re a fan of political and financial All Star teams, you probably want to stand in line to get your briefcase autographed.

Headlining the committee as co-chairs are California Senate President pro Tempore Darrell Steinberg and California State Senator Ted Gaines, though the big heavy hitters here include the guy whose feasibility study is being used as Sacramento’s blueprint, David Taylor, and political heavyweight Darius Anderson, who presented to the NBA Board of Governors back in April when the Maloofs applied their full court press to move the Kings down to Anaheim.

As for Taylor, his ICON Venue Group is partially owned by sports facility giant Anschultz Entertainment Group (AEG), who has the money and wherewithal to quickly implement a time-sensitive, politically driven arena project, though there have been no public statements made to the effect that they are on board in an official capacity for now.

Anderson’s inclusion is the largest elephant in the room, however, since he is a close advisor to none other than billionaire Ron Burkle, who was reportedly interested in buying the Kings back in April.

It was this interest that created the most quotable moment in the saga to date, when NBA insider Sam Amick reported that Commissioner David Stern made a wise crack saying K.J. was bringing him a “used car dealer,” but upon learning that the billionaire was interested in buying the Kings he grew quiet and then said, “You’ve got Burkle?”

Burkle was recently ranked No. 347 by Forbes among the world’s richest billionaires, and he built his empire in the grocery industry, parlaying several successful deals into a massive financial empire across many industries.

When the Maloofs were confronted with news of Burkle’s interest in buying the Kings at the NBA Board of Governors meetings in April (a move they claimed to have rebuffed a month earlier), they were outwardly angry and they insisted that their team was not for sale. Stern would eventually echo those sentiments by downplaying a potential purchase by Burkle, and since then Burkle’s name has fallen out of the Kings’ news cycle.

But that doesn’t necessarily mean he has stopped flirting with professional sports. Burkle, also a part owner of the Pittsburgh Penguins, has reportedly joined up with Dodger great Steve Garvey to form a group interested in purchasing the struggling Dodgers franchise. This follows his attempts to buy the Pittsburgh Pirates and Washington Nationals, and if you go back to 1999, his failed attempt to bring football to L.A. with, wait for it, AEG’s Tom Leiweke.

Incidentally (or not), AEG attempted to lure Burkle’s Penguins from Pittsburgh to Kansas City, and after that failed, AEG would later help Kansas City pass a public-private ballot measure to build the now-thriving Sprint Center that returns the city significant revenue based solely on concerts and events.

And just when it appeared that Burkle was falling off the Kings’ radar, a May 18 report came out of Las Vegas from none other than Lifestyles of the Rich and Famous host Robin Leach, who wrote that Burkle “insists on re-entering the Las Vegas market.” After the company Burkle bought shares in, the Morgan Hotel Group (MHG), failed to turn around their struggling Hard Rock Café property – it was sold off to creditors in March, much to the chagrin of Burkle, apparently.

Afterward, Burkle upped his ownership stake in MHB to approximately 30 percent and installed his guy, Michael Gross, as CEO.

At least one investment banking group, Jeffries, believes they intend to grow the company rather than sell it. Leach, who may not appear on the outset to be the best source of financial news, has spent the last 10 years on the Las Vegas industry news beat, and goes on to write that Burkle and his Morgan Hotel Group have “been actively kicking the tires, examining facilities and asking tough questions of a hotel group (in Las Vegas) willing to sell off one of its properties.”

Wait. Didn’t the Maloofs just sell? Yes they did – to two separate private equity firms in Leonard Green and TPG Capital. TPG owns Caesars Entertainment and would theoretically take over the Palms, but Leonard Green has also been trying to buy up gambling entities while the gambling industry is bottoming out – so it’s still anybody’s guess what the end-game is over at the Palms.

Let’s be clear – Leonard Green isn’t Burkle, and Burkle isn’t Leonard Green, but maybe Burkle is Finkle and Einhorn is a man.

Leonard Green and Burkle’s investment firm, Yucaipa Companies, both bought large portions of the grocer Whole Foods in 2009. And in 1991, Burkle sold his Almac’s grocery stores to Leonard Green for $75 million. All the while, both have been extremely active investing funds for the California Public Employees Retirement System over the last two decades. Surely it’s possible that in the elite rungs of society, where the billionaires play Kevin Bacon’s Six Degrees of Separation game with themselves all the time, that any interaction between the two entities is purely coincidental.

But just to be sure, I may have to go down to the Palms this Wednesday when Burkle will reportedly be there to celebrate the NHL awards and ask him about it myself.

The Maloofs, for their part, are not publicly tipping their hand regarding the involvement of Darius Anderson. George Maloof recently told Dale Kasler (via Ryan Lillis) of the Sacramento Bee that Anderson’s involvement in the committee “doesn’t give me any thoughts or concerns.”

As for the state of the funding hunt taking place in Sacramento, the jury is still out whether the $400 million wiped off the books at the Palms will allow the Maloofs to bring more money to the table for a new Entertainment and Sports Complex (ESC), though that doesn’t mean they should have to. After all, as reported yesterday, Anaheim is going forward with improvements on the Honda Center and is welcoming the Kings with a shiny new credit card. Besides, it’s entirely possible the new financial flexibility could be funneled back into the Palms, though pumping up your newly divested asset with freed up funds doesn’t sound like ‘Plan A’ for cash-strapped NBA owners looking to fund an arena.

Regardless, the Maloofs have said that they would contribute toward funding the ESC, so this would appear on the surface to give them better flexibility in doing so.

The 70-person Here We Build committee, meanwhile, consists of every expert, partner, planner, lawyer, community leader, and politician that would be needed to complete an endeavor of such magnitude. According to a source close to the situation, the NBA has also “firmly planted their feet in Sacramento,” and has “sent their best lieutenants to work day and night to get an arena built.”

Numbers-wise, the commission has enlisted the services of at least three well-respected consultancies to review the economic impact of the undertaking, which according to well-placed sources will show enough tax revenue and job creation to not just justify the new Entertainment and Sports Center – but also give political cover to the various bodies that will need to approve the proposal.

What this means, the source says, is that the tenor of the discussion in Sacramento has changed from ‘we don’t want to pay for this’ to ‘we need to pay for this, as it may very well be the difference between economic revival and economic disaster.’ And while there will certainly be skeptics and opposition groups that may choose to latch onto the issue, they could be committing political suicide as the Here We Build committee continues to release positive economic findings.

What does it all mean? It’s hard to say anything definitive right now. But while Kevin Johnson orchestrates his regional dream team, the powerful triad of Darius Anderson, the ICON-David Taylor group, and the NBA are knee deep in the fight to keep the team in Sacramento. And whether or not AEG or Ron Burkle can come along for the ride, the amount of firepower in Sacramento right now is big news for Kings fans.

Update (Saturday, June 18, 2011): The Sacramento Bee reports that the Maloofs will own just two percent of the Palms, according to regulatory documents.  They could have the option to buy back a significant share, up to 20 percent, and in the meantime TPG and Leonard Green will each own a 49 percent of the company.

On the surface, this would strengthen the chance that the Maloofs are freeing up funds to contribute toward Sacramento’s proposed Entertainment and Sports Center.  As for TPG and Leonard Green, the fact that the pair would have matching 49 percent shares creates an interesting dynamic, whereby each company could have the same voting rights (with the Maloofs holding a tie-breaking vote).

51 Questions: Do the Phoenix Suns finally have a playoff formula?

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PBT is previewing the 2015-16 NBA season by tackling 51 big questions that we can’t wait to see answered once play tips off. We will answer one a day right up to the start of the season Oct. 27. Today’s question:

Do the Phoenix Suns finally have a playoff formula?

It has been five years since the Phoenix Suns made the playoffs, tying the franchise record for longest playoff drought. It’s the fourth longest active drought in the NBA (Timberwolves at 11, Kings at nine, and Pistons at six).

Think about it this way: The Magic, Sixers, and Jazz have been to the playoffs more recently than the Suns.

Phoenix hasn’t bottomed out on a rebuild, they’ve actually been pretty good — they surprised everyone and won 48 games two seasons ago, then had 39 wins last season when things went very wrong and injuries crushed the team after the All-Star break. However, in a deep Western Conference pretty good isn’t good enough.

Suns management and ownership wants that to change. They want back in the playoff dance. Now.

It’s why they went hard after LaMarcus Aldridge this summer, coming in a surprising second to a Spurs team that nobody was likely to catch in that chase.

This summer the Suns made other moves to address needs. They went out and got Tyson Chandler as a free agent. The first reaction was he was there to provide a shot blocking and defensive quarterbacking, two things the Suns sorely lacked. However, just as importantly, they needed a vocal locker room leader, a vacuum that was part of the problem in Phoenix’s implosion last season.

The Suns also needed shooting, they went out and got Mirza Teletovic and drafted Devin Booker.

It’s easy to think the Suns regressed because they lost a lot of talent since the last trade deadline — Goran Dragic, Isaiah Thomas, Gerald Green, Brandan Wright — but they believe the pieces they have now fit together better.

Phoenix believes it can make the playoffs; it thinks it finally has the right formula.

Maybe. They will be in the mix. But a four things have to happen to make that a reality.

First is Chandler has to lead a defensive renaissance on this team. Last season they were average, 17th in the NBA in defensive efficiency, but Chandler can help change that. First, he gives them defensive rebounding that they lacked. He gives them a quarterback that they needed to call things out and have everyone on the same page (reports of how he talks on defense are already pouring out of camp). And he helps protects the paint — that means Eric Bledsoe, Brandon Knight, and P.J. Tucker can pressure the ball more and take risks out on the perimeter knowing Chandler can erase some mistakes.

The second is an obvious one: Bledsoe and Knight need to be able to work well together. They are going to share playmaking duties, and both are going to spend time working off the ball, both need to be ready for that mental adjustment. We haven’t seen that much yet, we need to see how it works out.

Third, there needs to be shooting to space the floor. Bledsoe is a penetrator who is a career 32 percent from three, while Knight shot just 31.3 percent from three after being traded to the Suns (likely due to ankle injuries that required off-season surgery). Those two men will be running the pick-and-roll with Chandler, who sets a good pick, rolls hard and can finish, but doesn’t have shooting range. The Suns other two starters are likely P.J. Tucker, who is not a huge threat from three but shot a respectable 34.5 percent from there last season, and Markieff Morris, who is a career 32.8 percent from three.

If I’m an opposing defense, what’s to keep me from going under picks and packing the lane against the Suns? Phoenix needs Knight to return to the guy who is a career 36 percent from three, they need Morris to improve from the outside, and they need guys like Teletovic and Booker to play key minutes and space the floor at times.

Fourth, and finally, they need the potentially volatile mixture of an unhappy Morris and a coach in Jeff Hornacek in the last year of his contract not to combust. Everyone is saying all the right things at the start of camp, and this is why guys like Chandler and Ronnie Price were brought in, but there is the potential for things to go sideways, especially if some early losses pile up.

The biggest hurdle for the Suns in ending their playoff drought is they are in the Western Conference.

Even if all four of things mentioned above go right for them — if they run and hit more threes plus play better defense — this is likely a 45 win team (give or take a few, and probably take). The problem is that in the West that may not be enough. Barring injuries, there are likely seven lock playoff teams in the West — Spurs, Warriors, Clippers, Rockets, Thunder, Grizzlies, and Pelicans. That leaves the Suns battling teams such as the Jazz, Mavericks and maybe the Kings for that final playoff spot. It may take more than 45 wins, and things are going to have to break the Suns’ way to get there.

Maybe Robert Sarver gets his way and the playoff drought ends this season, it’s more likely than snow in Phoenix this winter. But I wouldn’t bet much on either happening.

LeBron says “get it done” message was for both Cavaliers, Thompson

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Everything LeBron James does and says gets magnified and scrutinized.

So when he put out this photo on Instagram standing shoulder-to-shoulder with Tristan Thompson and the caption “get it done” it seemed a message to the Cavaliers.

Get it done!!!! Straight up. #MissMyBrother @realtristan13

A photo posted by LeBron James (@kingjames) on

LeBron clarified that on Sunday, saying this has become a distraction, and the message was for both sides to bend, as reported by Dave McMenamin of ESPN and Chris Haynes of the Plain Dealer.

When Thompson didn’t sign the qualifying offer he surrendered a lot of leverage, the Cavaliers don’t have to raise their five-year, $80 million offer — but reportedly they still would, a little. Thompson and his agent Rich Paul have pushed for a max contract, but that’s not happening.

At some point, the two sides will come to an agreement. For the Cavaliers, this is a distraction, their star is unhappy with that, and ultimately if they are going to make a title run they need the energy and rebounding Thompson brings (even if it is just off the bench). For Thompson, he can’t make up a year of lost salary, he has to come in and start getting paid at some point.

The two sides will get it done. Eventually. Likely before the season tips off.