team maloof with stern

In depth: Stern fires shot across the bow at the Maloofs, who continue to threaten the NBA’s billion dollar arena subsidy

15 Comments

A meticulous planner, everything David Stern says is run through a filter of lawyerly instinct and an ever-present awareness of his surroundings.

So when David Aldridge asked him if the NBA would support the Maloofs in their desire to move the Sacramento Kings to Anaheim on Tuesday – don’t think for a second that he hadn’t weighed the legal gravity of the situation or the wishes of his 29 other bosses.

“If there was a vote now, there would be no support for a move,” Stern said.

Stern then went on to poke at the Maloofs for their current plan, which includes staying in the nearly dilapidated Power Balance Pavilion for at least one more season, despite the family threatening to leave town for years because the building is dilapidated.

“That’s their prerogative. As long as it (Power Balance) stands and passes the fire code, I think it’s been a terrific place for the fans of Sacramento,” said Stern in his typical dry wit.

This is the most recent play on the NBA’s relocation chess board, and with the Maloofs overtly implying an antitrust lawsuit against the league for well over a year now, it’s a telling one.

Antitrust suits have been the weapon of choice for owners looking to find greener pastures, and though case law provides limited guidance for courts, it has generally been a favorable area of law for relocation efforts.

On the other side of the coin lies the ‘best interest of the league’ clause found in most sports associations’ bylaws, including the NBA’s. The bylaws allow for the commissioner to take any action they deem necessary to protect the league, and the league’s preferred association status is tied to the commissioner’s ability to show that ‘due process’ has been provided during disputes amongst owners.

The best way to understand this is to know that the courts generally aren’t going to restrain the trade of an NBA owner. They’re also not going to allow an owner unilateral ability to destroy the league that it operates within as a single entity, and the tipping point is somewhere in the middle. The leagues and courts have already found mechanisms (relocation fees) that allow the individual entities impacted by a move to be indemnified to a certain degree.

In the case of the Maloofs’ attempted move to Anaheim, sources with knowledge of the situation have reported that a relocation fee would be upwards of $300 million.

In this case, there are two injured parties in L.A. that would disapprove of the Maloofs’ desire to move into their market, but the more pressing issue for all of the NBA’s owners is what the Maloofs are doing to impact the integrity of the league’s billion dollar arena subsidy.

Since 1990, the NBA and its players have enjoyed a $3 billion public subsidy toward arena costs.

In April, the family backed out of a deal that as anchor tenants required them to pay $73 million toward a $391 million facility – $67 million of which would be provided by the NBA in the form of a loan. George Maloof called it a “good deal,” Gavin Maloof cried tears of joy after the parties emerged from an Orlando hotel room heralding the deal during All Star Weekend, and both Gavin and brother Joe held Sacramento mayor Kevin Johnson’s hands in triumph at the Kings’ next home game.

All of it was a ruse, though. It became clear that the Maloofs had no intention of striking a long-term deal with Sacramento when political crisis consultant Eric Rose was brought on by the family to handle its media strategy, and their antitrust attorneys began sending threat letters to the city that were designed to disrupt its ability to deliver on a tight timeline. Then came the ridiculous requests and demands, and the confidential communications between the family and the NBA eventually were leaked to a Sacramento website that opposed the arena deal.

Eventually, the Maloofs would burn most of their bridges in Sacramento in what Stern would describe later that day as “not the weirdest press conference we’ve ever had.” They hired an economist that twisted enough facts for Stern to say he acted in “ill grace,” and their antitrust attorneys pitched against Sacramento over PowerPoint. With only the Sacramento media allowed in their New York hotel conference room, George Maloof went on a wild tirade that made their economist Chris Thornberg look like a beacon of truth.

The NBA, who was authorized by the Maloofs to represent them in negotiations, thought the deal was fair, but the Maloofs expected to pay nothing and control all of the revenue streams in Sacramento. They expected this because of Anaheim’s long-standing offer to bring the Kings down south. Billionaire Henry Samueli and Anaheim’s city council’s offer to provide cash relief to the family would theoretically allow them to continue operating the team while making big market TV money, with the fallback position of selling the team for more than they could in Sacramento due to the larger market.

But that didn’t account for the minimum $300 relocation fee that the Maloofs or any subsequent owners would have to pay to infringe upon the Lakers and Clippers’ markets, making the deal untenable for the Maloofs if they wanted to keep the team. If their plan was to sell to Samueli or another Anaheim group, the relocation fee would certainly be a big nut for the new owners to take on in addition to the price of the franchise, not to mention a huge deterrent if the new owner senses they’re not wanted by the league.

It has been theorized that this relocation fee was communicated at some point to the Maloofs, who expected to leverage (or take) Anaheim’s offer despite being near the finish line with Sacramento. In that theory, once the Maloofs realized a move to Anaheim was not in the cards they decided to officially muck up a Sacramento deal that reflected their meager contributions, while testing their leverage with antitrust threats.

Regardless of the Maloofs’ intentions, cities that negotiate with the NBA and team owners over arena subsidies will now point to the family’s apparent bad faith dealings. Now, the league will have to explain to its civic partners how and why they should expend political capital and public funds if owners are going to use the scorched earth strategy when they don’t get what they want.

Sacramento spent significant sums of money and staff time in the arena negotiations process during a budgetary crisis only to find they were spinning their wheels – all while offering to pay for 65 percent of the arena’s costs – and the NBA is going to have to wear that issue unless they make it right by keeping a team there under a workable plan.

The timing couldn’t be worse for the league, either, with the Oklahoma City Thunder in the Finals just four years after Stern, former Sonics owner Howard Schultz, and now Thunder owner Clay Bennett stole 41 years of Sonics history from Seattle because the local government wouldn’t pony up. The government there certainly shoulders some of the blame for how that went down, but as the documentary Sonicsgate so handily points out – the principals on the NBA’s side had agendas that aren’t exactly ringing endorsements for the league.

Even if the league somehow makes things right in Sacramento and Seattle, this pulling back of the curtain could shave millions, if not billions of dollars off the NBA’s bottom line if not handled correctly by the owners. Municipalities are going to have a harder time convincing voters to part with tax money as the subsidy shakedown gets exposed, and arena funding campaigns will be forced to seek lower funding amounts as local voters lose their appetite for unsavory business tactics.

Whether it’s in the best interest of the league’s balance sheet, or the best interest of the league’s PR efforts, the Maloofs are killing the association on both fronts.

With Sonicsgate discussion now creeping into the national discourse during the Finals, we saw the first signs on Tuesday that the owners aren’t going to let the Maloofs throw the baby out with the bathwater. By stating publicly that the Maloofs have “no support” for a move to Anaheim, the league has all-but invited the Maloofs to pursue their antitrust suit.

Namely, a decision to not once, but twice inform the family that they cannot move could spawn any number of antitrust damages. If monies or opportunities are lost as the result of the league’s decision to block relocation last year, or if Stern’s public statement this year causes any damages – it adds a yet another critical piece of evidence the family could use when piled on top of the rest of the evidence they’ve been compiling.

This is a decision that does not come lightly, because neither the league nor its owners truly want to face the time and expense of a massive lawsuit like that, nor do they attack their own knowing they will one day be on the other end of the subsidy discussion themselves. At a higher level, the league does not want to see any more case law put onto record that would either weaken its ability to police itself or the various antitrust protections it enjoys. At the top of that list is the ability for the NBA and other sports associations to leverage its limited, monopolistic demand (teams) against cities in the gathering of public subsidy dollars.

Perhaps the league is aware of a solid offer from Seattle billionaire Chris Hansen that nobody out of Sacramento is willing to match, and that is the source of their confidence in saying the Maloofs would have “no support” in moving to Anaheim. Seattle mayor Mike McGinn met with Stern in New York on Monday and Hansen is ready to take on most of the cost of building an NBA-ready arena, assuming of course he can buy a team. That Stern didn’t mention the city in his response to Aldridge is a huge footnote.

Hansen could conceivably justify a higher purchase price than a Sacramento buyer given his land holdings around the proposed Sodo arena site, and the fact Seattle is about 30 percent larger than Sacramento in terms of its TV market. But those advantages are somewhat mitigated by the fact that a Seattle team would have to compete with both the Seahawks and Mariners for local revenues, whereas the Kings are the only show in town in Sacramento.

That said, saying the league decided to open itself up to antitrust exposure because of a bona fide offer it knows about from Seattle assumes a lot – including Seattle’s ability to deliver on an arena while they face local opposition of their own. It’s way more likely that the league has weighed the Maloofs’ ability to impact the league now and into the future, and it has decided that it’s in their best interests to call the family’s bluff.

If the family still cannot afford to spend money on free agents, and they will be losing significant revenue after spending the last few years biting the hands that feed them in Sacramento – Tuesday’s comments suggest the league has determined that the Maloofs cannot afford to play the antitrust card.

As is the case in most legal disputes, the winner isn’t determined by a judge or jury verdict, but which side has the largest stones and deepest pockets. The Maloofs have a large holding in Wells Fargo which many sources say is untouchable, and outside of that they have a fledgling entertainment business and a partnership to sell (OMG!) cell phone cases.

If we’re buying what the NBA sold us last summer, owning a team isn’t a huge money making endeavor. In reality, it’s a complex issue magnified by being in a small market. And unless you have a way to maximize what a basketball franchise can do, there are plenty of ways to make more from the investment it takes to play in the billionaires’ playpen.

To truly justify owning an NBA basketball team, one has to maximize their various holdings through cross promotion, invest in the areas around the arena, and maximize tax breaks before selling at an appreciated gain one day. To do this it takes a minimum level of free agent spending to field a team that will generate revenues to make that work.

The Maloofs don’t have the money to be that type of owner, at least anymore.

The Maloofs once had designs on maximizing the values of their holdings in the Palms and their entertainment empire, but the entertainment empire never panned out and the Palms is no longer theirs. Sacramento gave the family some proximity to help with the promotion of both entities, but now that bridges have been burned there, the only other destination that would supplement what is left of their non-NBA holdings was just rejected during Stern’s press conference.

Elsewhere, Seattle billionaire Chris Hansen isn’t going to build an arena so ‘the boys’ can play around in it, and even if the other cities that have expressed interest in the NBA can offer a sweetheart deal to them, they can’t significantly change the Maloofs’ cash-strapped outlook.

The only plan that makes any financial sense is for them to sell the team to the highest bidder, and with billionaire Robert Pera reportedly paying approximately $350 million for the Grizzlies to keep the team in Memphis and Tom Benson paying $338 million for the Hornets, it’s possible the Maloofs can top the $400 million mark on their way out the door.

Sacramento’s TV market is double the size of both Memphis and New Orleans, and it’s certainly plausible that Pera made an offer to the Maloofs given his Northern California roots. That Pera wasn’t able to buy the team from the Maloofs (or didn’t try) could speak to any number of issues, but finding a price point that would entice the Maloofs to sell is the NBA’s best bet at ridding themselves of their billion dollar subsidy problem.

A $400 million sale would provide $172 million for the Maloofs’ 43 percent stake, and with at least $150 million owed to the city of Sacramento and the NBA, every dollar is going to count if the family is seeking a debt-free break.

By chopping off the Anaheim leg of the Maloofs’ leverage play, the NBA is one Space Needle market away from stealing away all of the family’s leverage in a potential sale. Franchise prices in Vancouver, Columbus, Louisville, or Kansas City aren’t going to top what multiple Sacramento buyers are willing to pay, and with Seattle closing in on a viable offer it will soon be time for those buyers to put their last, best offers in, as well.

Stern loves the Sacramento market, the 20th largest market in the country and one that is devoid of competition from other sports leagues. He goes out of his way to praise the city at every opportunity for the job they did getting an arena deal done. But he’ll have a hard time forcing the Maloofs to take a substantially smaller offer to stay in California’s capitol.

It’s a nasty game of relocation chess right now. Milwaukee is next up on the clock with a year-to-year lease, an aging arena, and an aging owner. The NBA will be right back at it demanding a public subsidy, assuming of course they don’t let the Maloofs cook the goose that lays the billion dollar eggs.

As for the Maloofs, they have yet to respond to Stern’s ‘call,’ and it remains to be seen if they continue their bluff all the way down the river.

Trail Blazers advance to face Warriors after 106-103 victory over the Clippers

Leave a comment

PORTLAND, Ore. (AP) — Damian Lillard scored 28 points and the Portland Trail Blazers advanced to the Western Conference semifinals by beating the resilient Los Angeles Clippers 106-103 on Friday night to claim the first-round playoff series 4-2.

Portland will open the second round against the reigning NBA champion Golden State Warriors on Sunday.

CJ McCollum added 20 points for the Blazers, who became the first team to overcome a 2-0 deficit since Memphis came back against the Clippers in the first round in 2013.

Jamal Crawford had 32 points and Austin Rivers added 21 points and eight assists despite having 11 stitches above his left eye from a collision in the first quarter. But the Clippers could not recover from injuries to Chris Paul and Blake Griffin in Game 4 of the series.

Los Angeles didn’t surrender easily in the final game, never allowing Portland a double-digit lead.

“We didn’t panic when they put up a fight,” Lillard said.

The Blazers appeared to pull away when McCollum’s 3-pointer made it 98-91 with 4:49 left, but the Clippers persisted. Already plagued by injuries, the Clippers lost DeAndre Jordan to what looked like a sprained right ankle before Los Angeles closed to 98-95 on J.J. Redick‘s jumper.

McCollum’s 3-pointer put Portland up 101-95 with 2:16 left. Again the Clippers clawed back, pulling within 103-101 on Redick’s layup with just under a minute left. Crawford tied it with free throws but Mason Plumlee was fouled by Jeff Green under the basket for free throws to make it 105-103.

Crawford missed a 6-foot jumper and Plumlee made the second of two free throws with 1.5 seconds left for the final margin. Rivers’ 42-foot hurl at the buzzer fell short.

“It’s mixed emotions right now,” Rivers said, his left eye swollen shut. “I’m very sad, I’m very disappointed, but I’m also very proud.”

Portland will face a Golden State team that is dealing with its own injury issue: Reigning MVP Stephen Curry continues to rehab his sprained right knee. There is no official word on when he might return.

The Clippers were ultimately doomed by untimely injuries to their top two scorers.

Paul broke a bone in his right hand in the third quarter of the Clippers’ Game 4 loss at Portland. The Clippers’ nine-time All-Star was averaging 23.8 points and 7.3 assists in the series before he was hurt. He had surgery the next day and the Clippers declared him out indefinitely.

In the same game, Blake aggravated the left quad injury that sidelined him for 41 games this season. He was averaging 15 points, 8.8 rebounds and four assists in the playoffs.

After dropping the first two, the Blazers took a 3-2 lead with a 108-98 victory at the Staples Center on Wednesday night. Clippers coach Doc Rivers tinkered with his starting lineup in the absence of Paul and Griffin, inserting Crawford, Rivers and Paul Pierce.

On Friday, he started Luc Mbah a Moute and Jeff Green, while Crawford and Pierce went to the bench.

“This team had more heart than any other team I’ve coached,” the elder Rivers said.

The Clippers got another scare midway through the first quarter when Austin Rivers sustained a cut above his left eye in a collision with Portland’s Al-Farouq Aminu midway through the first quarter. Rivers returned before the end of the half after getting 11 stitches.

Crawford picked up the slack in his absence and had 22 points in the half. But Lillard and McCollum countered with a combined 25 and the Blazers led 50-48 at the break.

Redick hit a 3-pointer that put the Clippers up 58-53 early in the third. Aminu and Lillard countered with 3s and neither team could push the margin to more than five points.

Rivers’ 3-pointer put the Clippers ahead 77-75 late in the third, but the lead was short-lived when Lillard hit a 3 for Portland. Crawford’s jumper and Jordan’s dunk gave Los Angeles an 81-78 lead.

TIP INS

Clippers: Redick started all six games despite a heel injury that has reportedly bothered him throughout the series.

Trail Blazers: Pro golfer Peter Jacobsen, a Portland native, made three straight free throws for a contest during a first-half timeout. … Toronto FC and U.S. national team forward Jozy Altidore was among the fans at the game.

Austin Rivers gets 11 stitches after elbow to face, returns for Clippers

PORTLAND, OR - APRIL 29: Austin Rivers #25 of the Los Angeles Clippers walks off the court after Game Six of the Western Conference Quarterfinals against the Portland Trail Blazers during the 2016 NBA Playoffs at the Moda Center on April 29, 2016 in Portland, Oregon. The Blazers won 106-103. NOTE TO USER: User expressly acknowledges and agrees that by downloading and/or using this photograph, user is consenting to the terms and conditions of the Getty Images License Agreement. (Photo by Steve Dykes/Getty Images)
Leave a comment

It wasn’t intentional, Portland’s Al-Farouq Aminu and the Clippers’ Austin Rivers were both going for the rebound, but Aminu’s elbow caught Rivers clean in the eye.

That was nasty.

Rivers required 11 stitches, and after the game looked like Glass Joe after a rough day.

But you have to be impressed — Rivers came back into the game. He finished with 21 points and played hard, but the Clippers fell to the Trail Blazers 106-103 and were eliminated from the playoffs.

Pacers force Game 7 against Raptors with 101-83 win

of the Toronto Raptors against the Indiana Pacers in game six of the 2016 NBA Playoffs Eastern Conference Quarterfinals on April 29, 2016 in Indianapolis, Indiana.  NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement.
Leave a comment

INDIANAPOLIS (AP) Paul George scored 21 points, Myles Turner added 15 and the Indiana Pacers beat the Toronto Raptors 101-83 on Friday night to force a Game 7 of their series.

That will be played Sunday in Toronto, and the winner will advance to the Eastern Conference semifinals.

Indiana scored 18 straight points in the second half to pull away from the second-seeded Raptors, who haven’t won a postseason series since the first round in 2001.

DeMarre Carroll and Cory Joseph each had 15 points for the Raptors.

Kyle Lowry (4 for 14) and DeMar DeRozan (3 for 13) struggled again, and now the Raptors will head home and hear again about their troubled playoff problems: a Game 7 loss at home to Brooklyn in 2014, Washington’s four-game sweep last season and no series wins in a seven-game series. And there 15-year victory drought is the longest active streak in the league.

Indiana trailed by as much as 12 early, never led until early in the third quarter and had to fend off a late third-quarter charge from the Raptors before blowing it open in the fourth.

After Toronto cut the deficit to 65-64, Indiana responded by scoring the last six points of the third and the first 12 of the fourth to take an 83-64 lead.

The Raptors never recovered.

For Indiana, it was a dramatic turnabout.

Three days after blowing a 13-point, fourth-quarter lead, they came out flat. The Pacers struggled to make baskets, struggled to defend and played catch-up the entire first half after Toronto took an 18-6 lead just 6 1/2 minutes into the game.

But once the Pacers got righted, they took control and pulled away.

Indiana rebounded from a 44-40 halftime deficit with a 10-2 run to take its first lead, 49-48 on Ian Mahinmi‘s tip-in with 9:33 left. They extended the lead to 63-55 before Toronto charged back to get within 65-64 in the final two minutes of the quarter.

Indiana scored the next 18 points to seal it.

GOLDEN CROWD

Indiana handed out gold T-shirts to fans at the game and it caused a bit of a stir because the wording on the shirts read: United State of Basketball, We The Gold. It was a twist on Toronto’s motto – We The North. Raptors coach Dwane Casey didn’t seem to mind that Indiana stole the idea. “I know that they have a great home court. You know you’re in Pacers territory because of all the gold shirts,” he said. “But what happens between the lines for 48 minutes is what I’m concerned about.”

TIP-INS

Raptors: The Raptors wound up getting outrebounded 44-40 after dominating the post in the first half. … Jonas Valanciunas had 14 points, Lowry had 10 and DeRozan finished with eight. … Bismack Biyombo grabbed 10 rebounds. … Toronto gave up 20 points on 17 turnovers. … The last time the Raptors led a series 3-2 was in 2014 against Brooklyn. But the Nets won 97-83 on their home court before clinching the series with a 104-103 victory in Game 7 at Toronto.

Pacers: Turner blocked four shots, giving him 19 in the series to break Antonio Davis’ previous franchise rookie record in a six-game series. … Indiana started the second half by making five of its first seven shots. … Actor-comedian Mike Epps, who lives in Indy, attended the game. … The Pacers have won four straight elimination games on their home court.

Heat hang on with Wade’s heroics, force Game 7 vs. Hornets

CHARLOTTE, NC - APRIL 29:  Dwyane Wade #3 of the Miami Heat directs teammates against the Charlotte Hornets during game six of the Eastern Conference Quarterfinals of the 2016 NBA Playoffs at Time Warner Cable Arena on April 29, 2016 in Charlotte, North Carolina.  NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement.  (Photo by Streeter Lecka/Getty Images)
4 Comments

“It’s a make-or-miss league” has been a worn-out cliche in the NBA for years, but it was never more apt than Friday night. Dwyane Wade, a career 28.4 percent three-point shooter who hadn’t hit a shot from beyond the arc in the calendar year of 2016, knocked down two threes late to help the Miami Heat hold on and beat the Charlotte Hornets, 97-90, to force a Game 7 on Sunday.

Wade finished with 23 points on 10-for-20 shooting along with 6 rebounds and 4 assists to lead Miami, and had a key block in the closing minute to stave off a Charlotte comeback. The Heat held off Kemba Walker‘s 37-point explosion, which kept Charlotte in the game for much of the second half even as they never led in the third or fourth quarters.

Neither team got much out of their benches, and Miami overcame a rough night from Goran Dragic (6-for-17 from the field) and Hassan Whiteside fouling out in just 28 minutes of action. A three by Walker cut Miami’s lead to 90-88, the closest the Hornets got in the second half.

The two teams will now play a Game 7 in Miami on Sunday, with the winner facing the winner of that same day’s Game 7 between the Raptors and Pacers.