Kings ownership documents reveal major potential stumbling blocks for Seattle


CORRECTION:  February 8, 2013

An earlier version of this post incorrectly referred to a May 2003 document as an addendum to the Kings’ 1992 ownership agreement.  The May 2003 document is self-described as a proposal, which, if approved, would constitute a basis for an amendment of the Kings’ partnership agreement.  The version of the May 2003 document viewed by PBT was unsigned.

This item was co-written by Aaron Bruski and James Ham

The fight over the Sacramento Kings is building to a fever pitch.

In one corner, Seattle-based investors led by hedge fund manager Chris Hansen and Microsoft CEO Steve Ballmer have entered into an agreement to purchase the Kings from the Maloof family with the intention of moving to Seattle.

In the other corner, former NBA All-Star and Sacramento Mayor Kevin Johnson is moving comfortably toward an announcement of his equity partners, which will come at some time this week. Sources close to the situation have said that these owners will more than meet NBA criteria and be able to compete with or beat Seattle’s offer. Additionally, these owners will come to the table willing to pay their portion in an arena deal that was previously approved by the NBA, and sources say will be approved by the Sacramento City Council, as well.

USA Today and the Sacramento Bee reported that big money guys Ron Burkle and Mark Mastrov were in serious talks with the city, and USA Today reported that Burkle met with David Stern in New York on Thursday, January 24th. PBT can confirm each of those reports.

Since the Sacramento Bee’s report on the issue January 24, there has been speculation whether Kings minority owners have the “Right of First Opportunity” to purchase the team from the Maloofs.

They well may.

NBC ProBasketballTalk has acquired a copy of the Kings’ 1992 ownership agreement and an unsigned May 2003 proposal to amend the ownership agreement.

Article VII of the 1992 ownership agreement, “Transfer of Partnership Interests” starts off in Section 7.1 “Restrictions on Transfer” with the basic tenet that, “…no sale, assignment, transfer, encumbrance or hypothecation (herein referred to as a “Transfer”) shall be made by a Partner of the whole or any part of its or his Partnership interest (including, but not limited to, its or his interest in the capital or profits of the Partnership).” Section 7.2 permits certain specified sales to “Affiliates,” which in theory covers sales to essentially the same ownership (more on “Affiliates” below).

A little further down in Article VII, Section 7.3 spells out the right of first refusal in plain legalese.

“Section 7.3. Right of First Opportunity.

Notwithstanding the provisions of Section 7.1 hereof, if a Partner desires to assign all or part of his or its interest in the Partnership and such assignment is not specifically permitted under Sections 7.2A or 7.2B above, then the assignment shall be subject to the right of first opportunity hereinafter described in this Section 7.3. Before a Partner (the “Selling Partner”) actually concludes a sale of its interest in the Partnership subject to this Section 7.3, the Selling Partner shall give notice to (a) the General Partner and each other Limited Partner if he Selling Partner is a Limited Partner, and (b) to each Limited Partner if the Selling Partner is the General Partner (such Partner or Partners other than the Selling Partner being individually and collectively herein called “Non-Selling Partner”) setting forth the purchase price for which it will offer such Partnership interest for sale (which purchase price must be payable entirely in cash or part in cash and the balance pursuant to one or more promissory notes).

Section 7.3 further adds that a “non-selling partner” must step forward with its right to match within 30-days notice of the team’s sale. When that authority is exercised, the minority owner would have a 45-day window to complete a purchase.

The language is clear, but perhaps the Maloof family is counting on an earlier clause:

“Section 5.3. Limitations on Authority of the General Partner.

Notwithstanding the provisions of Sections 5.1 and 5.2 hereof:

A. The following decisions shall require the approval of Partners then holding Partnership Percentages aggregating at least 65%:

(1) The moving of the Team from the Sacramento area to another City prior to February 1, 2002;

(2) The sale of all or substantially all of the Partnership Property

Section 5.1 details the “Authority of the General Partner.” It includes language giving the majority owner “exclusive authority to manage the operations and affairs and to make all decisions regarding the Partnership and its business…”

Section 5.2 addresses the “Sale or Financing of Partnership Property.” It includes clear language stating “the General Partner shall have the sole and unrestricted right to and discretion to determine all matters in connection with any sale of the partnership Property or any part thereof…”

In layman’s terms, sections 5.1 through 5.3 establish the potential for a super-majority in the franchise’s decision-making authority. By reaching a 65-percent threshold of controlling interest, the Maloof family and partner Bob Hernreich have accomplished that by purchasing minority shares during the last decade.

While this all seems alarming for the Kings’ minority owners, it is not the end of the story. Nowhere in Sections 7.1 through 7.3 is an exception carved out protecting Section 5.3 and the Maloofs super-majority clause from the right of first opportunity. This means that while the Maloofs’ have the right to sell and/or relocate without minority approval, it doesn’t appear they have the right to sell any portion of their interest in the club without first giving the limited partners a chance to match.

As attorneys do, how an attorney may interpret the document may depend on who is paying their bills. And a judge may get to make the final call.

A May 2003 proposal to amend the ownership agreement proposed to strip the “Affiliate” language that sources tell PBT may have provided a small loophole for a transfer of the team’s majority share while circumventing the rights of the minority owners. The proposal included the following language:

“2. Partners Right of First Refusal

To clarify the issue of First Right of Refusal on purchase of partnership shares, the following is a proposed amendment to the Partnership Agreements:

A. Partner’s Proposal to Transfer. If a Partner proposes to sell, assign, or otherwise dispose of all or any part of the Partner’s Interest, however it is held, i.e. whether or not the interest is owned directly by it, or through another entity, individual, etc. (Hereafter “Such Interest”), then the Partner (“Selling Partner”) shall first make a written offer to sell such Interest to the remaining Partners, pro rata (as not all of the other Partners are required to participate in the purchase) based on their then ownership positions in the Partnership. The price, terms and conditions shall be as mutually agreed by the parties.

The following section goes on to propose that in the case of a third-party offer, the minority owners retain their right of first refusal for 60 days after receiving the selling Partner’s written notice and it finishes with this definitive statement:

“No Partner shall sell, transfer or otherwise dispose of their Interest, even if owned through a different entity and it is the purported different entity selling all or a portion of itself within the holder of the Interest, except in accordance with the provisions of this Article.”

There is one more note of interest in Section 3 of the proposal titled “Sale of an Interest in the General Partner”:

“Any offer received by the General Partners to purchase a portion, or all, of their interest, which was not purchased by the Limited Partners pursuant to their Right of First Refusal, would be considered an offer to purchase that percentage of the total entity.”

Meaning, that if the Maloofs sell their interest to the Hansen-Ballmer group for the reported $525 million and the minority owners do not take up the Right of First Refusal, Hansen and Ballmer would be required to purchase a proportional stake of the minority share as well.

We aren’t looking at $341 million (the Maloof and Hernreich 65-percent share), we would be looking at the entire $525 million. Although whether that sum would make the Seattle group even blink is up for debate.

The proposal language states that if the proposal is approved by the partners, it will constitute a basis for an amendment of the ownership agreement to be drafted and executed by all partners.  The version of the May 2003 proposal viewed by PBT was unsigned but according to a source with intimate knowledge of the situation, the proposal was signed in May of 2003.  PBT is not aware of an amendment to the ownership agreement that was later drafted and executed by all partners.

So the question now becomes, is there a Right of First Opportunity/Refusal and if so, is there a minority owner who is willing to step up and invoke that right? If so, can that owner come up with the financial backing to match the deal from the Hansen-Ballmer group?  What is the backstory of the May 2003 proposal and what became of it?  And lastly, will the NBA continue to back a Seattle deal that may have ignored the rights of minority owners?

It would be surprising if the NBA didn’t have some serious questions for the Maloofs and the Seattle group.

In the East, it’s the Cavs and then everyone else – again

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The Cleveland Cavaliers know what it feels like to enter the season as Eastern Conference favorites.

They begin this one with an entirely unfamiliar label – defending champions.

The rest of the East has spent the last six years unsuccessfully trying to unseat LeBron James from the throne. Whether he has been in Cleveland or Miami, James has led his team to the NBA Finals every year since 2011. But his crowning achievement came last season, when his Cavaliers captured the city’s first pro sports championship in 52 years by defeating the record-breaking Golden State Warriors.

Now the Cavaliers are wearing an even bigger target on their backs.

“It’s the same mindset: Let’s win a championship,” James said. “We just want to be able to put ourselves in position to do that. We have the ability, we have the personnel, but we have to work now. We can’t expect for it to happen just like we didn’t expect for it to happen last year. We put the time into it.”

The Boston Celtics finally found a star in Al Horford to team with a lunch pail group that has overachieved under coach Brad Stevens. The Toronto Raptors are back for more after falling to the Cavs in the Eastern Conference finals and Chicago and New York brought in aging stars in a desperate attempt to change the balance of power in the league’s weaker conference.

James’ reply: Bring it on.

“We can’t be entitled to anything we’ve got to go out and get it and work for it,” he said. “We’re a team that’s very driven and we look forward to all the challenges the season holds.”

A look at the East:


1. Cleveland – Championship hangover? No one expects that with the Cavs. There is one certainty in the NBA: LeBron will make it to the finals.

2. Boston – Horford and Stevens appear to be the perfect match.

3. Toronto – Keep doubting the Raptors. Kyle Lowry wants you to. Should be nip and tuck with the Celtics all season.

4. Washington – Here’s where it starts to get dicey. Wiz are betting Scott Brooks will be able to push the buttons Randy Wittman couldn’t.

5. Atlanta – The Hawks took a step back last season, then swapped Horford for Dwight Howard. Things could go either way in Hotlanta this season.

6. Charlotte – Mostly stood pat this summer after a surprising sixth-place finish last year. A healthy Michael Kidd-Gilchrist sure could make a difference.

7. Detroit – Would have picked them higher, but Reggie Jackson‘s injury is a concern.

8. Indiana – Pacers swapped out the underrated George Hill for Jeff Teague, traded Frank Vogel for Nate McMillan and brought in Thaddeus Young and Al Jefferson to funk things up.


9. Chicago – Dwyane Wade‘s homecoming is a great story. But the severe lack of shooting figures to hold the Bulls back.

10. Miami – With Wade and Chris Bosh gone, it’s rebuilding time. Don’t expect Pat Riley and Erik Spoelstra to be down long, though.

11. New York – Manhattan is all excited about the star power that Phil Jackson brought in. The reality is Derrick Rose and Joakim Noah have not been completely healthy for years.

12. Milwaukee – Khris Middleton‘s injury is a killer that prompted scrambling for wing help. The Greek Freak at point guard, thought? That will be appointment viewing.


13. Orlando – Vogel landed with the Magic and he has all kinds of defensive weapons at his disposal. That will be essential because scoring may be difficult to come by.

14. Philadelphia – You have to be kidding us with the Ben Simmons injury. Hey, at least Joel Embiid is healthy. Please keep it that way.

15. Brooklyn – Move over Philly, there’s a new basement dweller in the East! Sean Marks and Kenny Atkinson are well thought of, but it’s going to take time to get this thing turned around.


LEBRON’S LEGACY: The last time James did not appear in the NBA Finals was 2010 when the Los Angeles Lakers beat the Celtics. James’ Cavaliers were eliminated in the East semifinals by the Celtics, and he signed with the Heat that summer.

WALL AND BEAL: Much has been made of the chemistry, or lack thereof, in Washington’s backcourt. If John Wall and Bradley Beal are on the same page, the Wizards are dangerous. If they can’t find a way to harmonize, Washington could plummet down the standings.

NEW FACES: Brooks in Washington, McMillan in Indiana, Vogel in Orlando, Atkinson in Brooklyn and Jeff Hornacek in New York start their first seasons as coaches after a summer of upheaval in the conference.

SCHRODER TIME: The Hawks traded Teague to Indiana to open the door for Schroder’s slashing game. He’s been waiting for this chance, and his ability to run the team, play defense and knock down the occasional jumper will be critical to Atlanta’s chances.

ROOKIE WATCH: Only three of the top nine picks in the draft went to teams in the East. Youngsters to keep an eye on include Jaylen Brown in Boston, Jakob Poeltl for Toronto, Thon Maker in Milwaukee and Denzel Valentine in Chicago.

AP Sports Writer Tom Withers in Cleveland contributed to this report.

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Wade, Rondo bring intrigue if not title hopes to Bulls

dwyane wade rajon rondo
Associated Press

CHICAGO (AP) No matter how this season plays out, this much is clear about the Chicago Bulls: They’re worth watching.

They jettisoned one hometown superstar and welcomed another when they traded former MVP Derrick Rose and signed three-time NBA champion Dwyane Wade.

They also handed the keys to an All-Star guard in Jimmy Butler who called out his coach last season. And on top of that, they added mercurial point guard Rajon Rondo to the mix.

Coming off a flat season that ended with them missing the playoffs for the first time since 2008, the Bulls at least spiced things up in the offseason. Now, it’s time to see if interesting also means better.

“I love the vibe of this group,” Hoiberg said. “I love the competitiveness of this group.”

The Bulls clearly had to do something after a year that began with high expectations ended with a 42-40 record, a fractured locker room and all sorts of questions about team leadership.

Gone is Chicago native Rose – derailed by injuries after leading the Bulls to heights they hadn’t reached since the Michael Jordan Era – after being dealt to New York for center Robin Lopez and guard Jerian Grant. So is Joakim Noah, who signed with Knicks not long after the big trade. Pau Gasol went to San Antonio as a free agent.

Wade shocked Miami when he chose to come home to Chicago and accept a two-year deal worth about $47 million.

Here are some things to look for this season from the Bulls, who open at home against Boston on Oct. 27:


The Bulls thought Hoiberg’s fast-paced tempo and soft-spoken style were just what the team needed when he was hired. They just didn’t think the learning curve would be as steep as it was. Hoiberg got called out by Butler last season for not coaching the team hard enough. The system and the roster did not mesh.

So does Year 2 bring a better Hoiberg?

Executive vice president of basketball operations John Paxson said he expects it. So does Hoiberg, who came to the Bulls after a successful five-year run at Iowa State.

But is this the right roster for him? After all, Wade and Rondo are both in their 30s. And if the Bulls struggle, who takes the fall?


Who knows what might have happened had Wade signed with the Bulls six years ago rather than form a superstar triumvirate with LeBron James and Chris Bosh in Miami? But he’s here now, coming off a strong season and being counted on at age 34 to set the tone for the Bulls’ younger players. The 12-time All-Star has been doing just that, speaking up in practice and meetings.


It’s been a steep climb for Butler from low first-round draft pick to bench warmer to two-time All-Star with an Olympic gold medal. But his success hasn’t translated to team success. Butler’s first All-Star season ended with Tom Thibodeau’s firing. Last year, the Bulls dropped into the lottery. And while Wade and Rondo have said the Bulls are Butler’s team, it’s not clear exactly how far he can lead them.

“I can learn from (Wade and Rondo), the winning culture they’ve built,” Butler said. “I’m excited because there’s so much growth I can handle in that aspect of the game. You look at what Wade has done for his career, a future Hall of Famer. I think that I can model the way I do things around him.’


While the Bulls added scoring punch and the reigning assists-per-game leader in Wade and Rondo, they still lack a starting guard who can consistently hit from long range. That was a problem last season with Rose and Butler, who moves to small forward.

Spacing could be a problem when Rondo, Wade and Butler are on the court together, though the Bulls do have solid shooters in Nikola Mirotic and Doug McDermott. Gasol’s departure also creates a scoring hole in the paint.


Rondo is coming off a resurgent season with Sacramento that saw him average 11.9 points and a league-leading 11.7 assists. It was the fourth time he averaged a double-double in a season and the first for him since the 2012-13 season. The four-time All-Star has clashed with coaches, most notably Dallas’ Rick Carlisle, and his relationship with Hoiberg could be one to watch.

Damian Lillard drops first rap album “The Letter O”

damian lillard the letter o
Damian Lillard via Twitter
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Damian Lillard keeps hearing the calls from fans on social media to work harder in the gym instead of rapping. This summer, it looks like he did both.

Lillard announced on Thursday that he would be dropping his first album, titled “The Letter O”, with features from artists like Lil’ Wayne and Jamie Foxx.

The Portland Trail Blazers point guard has come out with a few songs here and there, but this is the first full-featured album of his career. The album comes after Lillard performed at the Crystal Ballroom in July, a premiere concert hall in downtown Portland.

Oh, and about that whole “stay in the gym” thing? Lillard answered that too.


“I recorded the entire album in L.A. and it took me one week,” said Lillard. “So I was there for five days and from 12 noon to 12 midnight I was in the studio. I’d workout at 8 am and then I’d go lift and then I’d go to the studio, 12 to 12, five days straight.”

The Letter O is a tribute to Lillard’s heritage — Oakland, Ogden, and Oregon — the three places that are the mileposts of his basketball career. During lineups, Lillard is announced as “Wearing the letter O” before every Blazers game.

You can The Letter O on Spotify, Apple Music, and iTunes.

Horford’s addition gives Celtics high hopes for new year

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Associated Press
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BOSTON (AP) From afar, Al Horford has always had respect for the history of the Boston Celtics.

He made his first visit to the Garden as a rookie in 2007 and found himself drawn to the championship banners that hung above the court.

That was the same season that Kevin Garnett and Ray Allen joined Paul Pierce to form the Big 3 and went on to win Boston’s 17th NBA championship.

As the Celtics biggest free agent signing since then, Horford – with his four-year, $113 million contract – is now the centerpiece of the franchise as it chases banner No. 18.

He enters the 2016-17 campaign no longer the wide-eyed rookie that arrived in Atlanta nine years ago. He’s now a veteran four-time All-Star that team president Danny Ainge believes can provide leadership to a young core led by Isaiah Thomas, Avery Bradley and Jae Crowder. The immediate goal is to help Boston advance past the first round of the playoffs for first time since 2012.

“I know that I’m gonna help our team be better,” Horford said. “I’m gonna try to come in and try to gel as fast as I can and just make sure that we’re playing at a high level, and that we’re working every day. And we’ll see what happens.”

There’s no denying that Horford joins a team that has been on the upswing under coach Brad Stevens. Boston won just 25 games his first season in 2013-14 but have improved to 40 and 48 wins the past two, which have included back-to-back playoff berths.

But each of those postseason appearances ended in first-round exits, including a 4-2 loss to Horford’s Hawks last season.

That loss was marred by a hamstring injury to Bradley in Game 1, as well as nagging injuries which dogged Crowder and center Kelly Olynyk.

With all of that behind them, Thomas is anxious to see what this group can accomplish when healthy and with some extra star power.

Aside from providing some help defending the rim and rebounding, Horford’s shooting ability also should open up the floor more for a scoring point guard like Thomas, and improved shooter like Bradley.

The expectation is that Crowder will also be freer to operate with Horford drawing attention in the paint.

There is also No. 3 overall draft pick Jaylen Brown, whose athleticism should fit right in with a group that loves to run the floor.

“We have a pretty good team, a team that could make some noise – some legitimate noise,” Thomas said. “If we put it together and play the right way, we can make a lot happen this season. You don’t ever want to put a ceiling on it, but we have a really good team I know that.”


Probably the Celtics’ biggest loss this offseason was the departure of swingman Evan Turner to Portland in free agency. Aside from being a productive sixth man, he also at times triggered their half-court sets when he was in the game. “That’s a big loss,” Stevens said. “A big loss because of the way he handled the ball, the big shots that he made late in the game, his positional versatility defensively, his everyday workman-like attitude in the gym.”


The Celtics were dealt a small blow to their second unit when Marcus Smart suffered a left ankle sprain in their preseason finale. The silver lining is that while he’s out, it will almost certainly mean increased playing time for second-year point guard Terry Rozier. Rozier had his best moments as a rookie on the defensive end, but showed a lot of improvement in his shooting during the preseason. “He works hard at the game and it’s no surprise that he’s having success,” Stevens said. “We’re going to rely on him.”


Olynyk sat out the entire preseason recovering from arthroscopic surgery on his right shoulder in May. After not being cleared for contact in time to appear in any preseason games, it’s possible he could miss a good chunk of games early in the season. It will mean one less body to relieve Horford, but will give the Celtics opportunities to play smaller at times.


The Celtics have a fairly balanced schedule over the first full month of the season, but will play 10 of their first 18 games on the road. Horford will play his former Hawks team three times this season, beginning Jan. 13 in Atlanta.

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