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Future of NBA arena subsidies, market comparisons to decide Kings’ fate

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As Sacramento Mayor Kevin Johnson has been advertising for the past month, we did indeed get confirmation of the identity of his ‘whales’ at his State of the City address on Thursday.

Reiterating parts of his four-part plan that included bringing together a local ownership group, finding big equity investors (whales), putting together a downtown arena deal, and demonstrating the value of the Sacramento marketplace – Johnson would announce that 24 Hour Fitness founder Mark Mastrov and billionaire Ron Burkle would put in a bid to keep the Kings in Sacramento.

“With all due respect to Seattle, I do hope they get a team someday, but let me be perfectly crystal clear, it is not going to be this team,” said Johnson.

Johnson also announced that former Kings great Mitch Richmond would join the local ownership group and that the city’s proposal would include an option to return WNBA basketball to Sacramento.

Sources close to the situation told PBT that the framework of the offer delivered to the NBA on Friday was very close to Seattle’s $341 million offer for a controlling 65 percent interest in the club. NBA spokesman Tim Frank confirmed delivery of the offer on Friday, the day of the deadline.

Over the next month Sacramento will continue to iron out the details on a public subsidy and arena deal locally with the Sacramento City Council, which will ultimately vote on a term sheet to be delivered to the Board of Governors in time for their April 18-19 meeting.

Sources tell PBT that the Sacramento offer will be conveyed by the group to the NBA’s joint committees in charge of reviewing the situation on or around April 1. It is expected that Seattle’s group will also meet with that committee around that time, though no meeting has been publicly acknowledged.

According to sources, the two issues that will drive the conversation is the league’s strategy for securing arena subsidies in the future, and the impact each market will have on team revenues and the league’s financial model as a whole. Also under consideration are timelines to deliver an arena, ownership groups, and the precedent the league could set by blocking an owner from selling to a group of their choosing.

The league blocked a sale of the Minnesota Timberwolves to a group headed by boxing promoter Bob Arum in 1994, but a well-placed source told PBT that the league views this transaction as “unprecedented,” citing that never before has the league relocated from a city that has supported its team both at the gate and with public subsidy dollars.

The Maloof ownership group reportedly has “little to no leverage” in NBA’s decision-making process. They also reportedly owe the NBA in excess of $100 million on a line of credit they’ve used throughout their ownership. If called in, the family’s financial woes could give the league an opening to use the ‘Best Interests of the League’ clause, similar to the way Major League Baseball removed Dodgers owner Frank McCourt.

Sources do not expect the Maloof family to push back on the league’s decision to back either Sacramento or Seattle, citing the prohibitive costs of an antitrust lawsuit, and the potential for the family to lose a chance to cash out in Sacramento or Seattle.

The issue of market comparisons between Sacramento and Seattle is cloudy, but sources expect Sacramento to be competitive in that area because it has one major sports team in their No. 20 TV market, while Seattle could have six major sports teams in its No. 12 TV market. We will cover this in a bit more detail later in the next few weeks.

While details about Sacramento’s ownership group are a bit hazy at this time, it has been expected that Mastrov would be the front man. The more private Burkle reportedly would focus on the development of the Downtown Plaza location. Sources indicate the duo will share in the ownership of a potential deal, though it’s unclear what those percentages will be. Both owners have been vetted by the NBA, and Mastrov finished second in the Golden State Warriors bid that recently went to the Joe Lacob group.

While Seattle’s Chris Hansen-Steve Ballmer group has enormous wealth, another well-placed source speaking to PBT under condition of anonymity said the league is happy with both ownership groups and not to expect a deal to hinge on any comparison between them.

If a showdown comes to the owners’ deciding vote, some sources hinted at a scenario in which the league tells the Hansen group that they’re going to choose Sacramento – allowing the Hansen group to bow out gracefully and avoid a divisive ownership vote.

Should the league favor Sacramento, sources say the work the city has done to fight for its team and the narrative it will give the league to sell to future cities in arena negotiations will have played a critical role in the NBA’s decision-making process.

Seattle’s deal contains a greater percentage of private funds due to local initiative-91 requiring public funds to return a guaranteed profit, which is a trend the league wants to avoid.  On the other hand, Sacramento’s deal fits the public-private model the league is selling to cities, with a larger public subsidy going toward a new state-of-the-art building in a downtown revitalization effort.

We will cover that issue in greater detail in the coming weeks.

In order to keep their team, Sacramento will need eight votes out of 29 other owners to block the transfer of ownership to Seattle’s Hansen/Ballmer group.

Spurs demolish Thunder to take Game 1 of second-round series

SAN ANTONIO,TX - APRIL 30: LaMarcus Aldridge #12 of the San Antonio Spurs scores over Steven Adams #12 of the Oklahoma City Thunder during game one of the Western Conference Semifinals for the 2016 NBA Playoffs at AT&T Center on April 30, 2016 in San Antonio, Texas. 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 Ronald Cortes/Getty Images)
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The second round was supposed to be when things got exciting. Instead, the San Antonio Spurs put on an absolute clinic at home, blowing out the Oklahoma City Thunder, 124-92 to take a 1-0 series lead.

Just about everything went in for San Antonio, particularly for LaMarcus Aldridge and Kawhi Leonard, who combined for 63 points. How dominant were they?

Aldridge in particular got anything he wanted against the Thunder. Oklahoma City’s stars were quiet, with Kevin Durant scoring just 16 points and Russell Westbrook 14. San Antonio controlled the game from the start and Oklahoma City never recovered from the opening punch.

It’s hard to imagine Durant and Westbrook are this ineffective again, and hopefully the rest of this series will be a little more competitive. But the Spurs did what the Spurs do, and did nothing to shake the feeling that they’re the favorites to win the west, now that Stephen Curry‘s status is unknown.

Hawks get another playoff shot at King James and Cavaliers

at Philips Arena on April 1, 2016 in Atlanta, Georgia.  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.
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ATLANTA (AP) A year ago, Atlanta’s magical season ended with a resounding sweep by Cleveland in the Eastern Conference final.

Now, the Hawks have another shot at LeBron James and the Cavaliers.

Feeling confident after an opening-round victory over Boston, the Hawks returned to practice Saturday to begin preparations for the best-of-seven series.

Game 1 is Monday night in Cleveland.

The Hawks were the top-seeded team in the East last season after a record 60-win campaign. It didn’t do them much good against the Cavaliers, who steamrolled Atlanta in four straight games.

Even though they slipped to 48 wins and fourth in the conference, the Hawks actually sound a bit more confident heading into this matchup, largely because of their improved defense and rebounding.

Report: Warriors to replace Luke Walton from outside the organization

MILWAUKEE, WI - DECEMBER 12: Interim Coach Luke Walton of the Golden State Warriors talks on the sideline during the second quarter against the Milwaukee Bucks at BMO Harris Bradley Center on December 12, 2015 in Milwaukee, Wisconsin. 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 Mike McGinnis/Getty Images)
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For the second consecutive year, the Warriors have lost their lead assistant to another team. When the Pelicans hired Alvin Gentry during last year’s playoffs, Steve Kerr promoted Luke Walton to associate head coach and added former journeyman big man Jarron Collins to the bench. Now that Walton is headed to the Lakers as their next head coach, the Warriors will go outside the organization to find a replacement, according to ESPN.com’s Marc Stein. And one name that will likely not be in the mix is David Blatt, who very nearly became an assistant under Kerr in 2014 before being offered the Cavaliers’ head job.

Given Walton’s success this season as interim head coach while Kerr recovered from back surgery, this will undoubtedly be the most attractive assistant job in the league.

Report: Luke Walton’s Lakers contract is for 5 years, $25 million

DENVER, CO - JANUARY 13:  Interim head coach Luke Walton of the Golden State Warriors leads the team against the Denver Nuggets at Pepsi Center on January 13, 2016 in Denver, Colorado. The Nuggets defeated the Warriors 112-110. 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 Doug Pensinger/Getty Images)
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In the last few years, NBA head coaching salaries have skyrocketed, and new Lakers coach Luke Walton is no exception. According to the Los Angeles Times‘ Mike Bresnahan, Walton is getting $25 million over five years, which is the same as Steve Kerr’s deal with the Warriors, now-former Knicks coach Derek Fisher’s deal in New York, and Fred Hoiberg’s deal with the Bulls.

This kind of money has become standard for head coaches who don’t also have front-office power. Tom Thibodeau and Stan Van Gundy both get between $7 and $8 million annually to do both jobs. Given how good Walton’s current situation with the Warriors is, the Lakers probably had to be on the high end of the coaching spectrum to get him to leave.