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.

Report: Spurs paying Pau Gasol about $16 million each of next two years

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The Spurs got Pau Gasol to decline his $16,197,500 player option, allowing them to chase major free agents. They didn’t take advantage of that flexibility, so they’re re-signing Gasol to make him whole – and then some.

Adrian Wojnarowski of ESPN:

Sources: Free agent Pau Gasol’s deal to return to Spurs: three years, $48M with a partial guarantee on final year

If Gasol’s 2018-19 salary is guaranteed – strongly implied by this report – this is a bad contract.

The 37-year-old Gasol, still a nice player, isn’t worth $16 million this season in a tight center market. It’s fine to pay him that much given the circumstances of his opt out. But to guarantee him a similar amount – salary-cap rules dictate his 2018-19 salary be within 5% of his 2017-18 salary – at age 38 is an awful choice.

Especially for San Antonio, which was shaping up to have massive flexibility next summer.

The Spurs can still have significant cap room if LaMarcus Aldridge, Danny Green and/or Rudy Gay opt out. But then they wouldn’t have Aldridge, Green or Gay. So, the more space to upgrade, the better. San Antonio just cut about $16 million from that maneuverability.

Kawhi Leonard is a 26-year-old superstar who has proven his ability to thrive deep into the playoffs. Instead of aggressively working to add talent to chase another championship, the Spurs are surrounding him with the status-quo declining-veteran supporting cast.

That was acceptable this year, once Chris Paul chose the Rockets. But to commit about $16 million toward a similar team in 2018 is a major mistake.

Giannis Antetokounmpo gives views on loyalty while explaining Kevin Durant’s move

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As questions swirled about his future with the Bucks, Giannis Antetokounmpo tweeted that loyalty was in his DNA.

But Kevin Durant also said he was loyal to the Thunder before leaving for the Warriors.

Durant explained the appearance of a contradiction by saying he showed his loyalty by signing a contract extension without options and playing hard every night. Durant was fully loyal to Oklahoma City while he was there. To him, it didn’t mean he pledged to stay forever.

What does loyalty mean to Antetokounmpo, who once said he wanted to play in Milwaukee forever? He provided insight when asked to compare his tweet to Durant’s sentiments.

Antetokounmpo:

A lot of people say they’re go to stay on a team, and they decide to move to a different team. But you guys always got to remember that a guy might want to stay on the team, but the team doesn’t do the right things and the right moves for the player to become great. Because K.D., the reason he wanted to stay in OKC was to be the champs, right? So, did they win a championship? That’s why he decided to leave. He did win a championship down in Golden State.

This is a very rational response, one that indicates his outlook is similar to Durant’s. Nobody would question Antetokounmpo’s devotion to Milwaukee right now. But that doesn’t mean he’ll feel this way indefinitely.

The Bucks have to reciprocate by doing well for Antetokounmpo.

So far, the results have been mixed. They’ve built a solid young nucleus that includes by Khris Middleton, Malcolm Brogdon, Thon Maker and Tony Snell. Jabari Parker would’ve counted if not for multiple ACL tears, which can derail a career. Luck can factor. So, it’s on Milwaukee to nail what it can control – like running the franchise without the disarray shown during its general-manager search.

Unlike the Thunder with Durant, the Bucks might be able to buy loyalty with a designated-veteran-player extension before Antetokounmpo’s contract expires in 2021. Those super-max deals didn’t exist under the previous Collective Bargaining Agreement, when Durant left for Golden State.

The salary cap is also stagnating, leaving it far less likely a team can duplicate the situation the Warriors’ presented Durant – a ready-made championship contender with max cap space. Relatively, the Bucks probably won’t have to look quite as appealing to be Antetokounmpo’s best option.

But they’ll still have to create some allure.

It sounds as if Antetokounmpo’s loyalty to the Bucks is, quite reasonably, conditional.

Gordon Hayward: My relationship with Brad Stevens ‘completely overstated and overhyped’

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Gordon Hayward is still trying to seize control of the narrative surrounding his free agency.

The Celtics – coached by Brad Stevens, Hayward’s coach at Butler – expressed interest in Hayward in 2014. Then, with Stevens still in Boston, they completed their highly anticipated pursuit of Hayward by signing him this year.

Just don’t pin that all on Stevens.

Hayward on The Woj Pod:

The relationship between Brad and I has been completely overstated and overhyped from everybody.

And you mentioned it. There was always rumors about going to Boston, and those, to me, were always just rumors. I didn’t really ever think about it, because I wasn’t a free agent, wasn’t really concerned with the Boston thing. But everybody else was saying, “Oh, he’s going to go to Boston because of Brad.” And we had a great relationship, but it wasn’t like we were constantly texting each other or calling each other. He’s the head coach of the Boston Celtics. He’s got things to worry about.

I played for Brad for two years. And so it wasn’t like everybody kind of made it seem, like we were besties or something.

That was something I kind of was – “what’s this going to be like? It’s been seven years since he coached me.” And immediately though, he called me July 1. And after that phone call, I thought like, “Oh, no. This isn’t going be any different.” It was one of those things where he made me feel like, even if I don’t go to Boston, it’ll be fine, and we’ll still have that great relationship, and he’ll still be in my corner, and he’ll still be rooting for me and supporting me.

Hayward was in control, and he chose Boston. Stevens didn’t do it for him. Hayward did it – and he did it the evening of July 4, not before.

Got it?

That darned fake news, always talking up the Hayward-Stevens relationship. Take this article in The Players Tribune, in which the author contends Hayward viewed Stevens as “the person I knew I could count on the most.”

Look, NBA players generally like the trappings of being recruited. They generally dislike the perception that they were recruited and weren’t in complete control. That’s why Kevin Durant keeps denying Draymond Green‘s stories of recruiting the superstar to the Warriors.

Elements of Hayward’s relationship with Stevens were probably perceived incorrectly by some. I doubt the Celtics’ coach was in frequent contact with a Jazz player. But the underlying idea – that Stevens made Boston more likely to pursue and get Hayward – was also probably correct.

Report: Cavaliers prioritizing youth in Kyrie Irving trade

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In the wake of Kyrie Irving‘s trade request, the Cavaliers have three fundamental options:

  • Trade Irving for immediate help to continue a championship chase around LeBron James
  • Trade Irving for younger players and/or draft picks to kick start a rebuild in case LeBron leaves next summer
  • Don’t trade Irving

It seems Cleveland is taking the second route.

Zach Lowe of ESPN:

The Cavaliers are projecting confidence they can snare a king’s ransom for Kyrie Irving, and more than that, they are acting — for now — as if a trade is almost inevitable, and that there is little chance of salvaging their relationship with him, according to several sources familiar with the situation.

Cleveland is seeking a bundle of assets, but the highest priority right now is snagging a blue-chip young player, according to sources across the league. That is not necessarily a signal they think James is leaving. They would like to get everything: one or two veterans who can help LeBron dethrone Golden State, that blue-chipper, and picks. They want to prepare for a worst-case scenario of LeBron leaving without shoving him out the door by acquiring players he deems unready. Even so, the blue-chipper appears to be their guidepost, sources say.

Barring a misevaluation by another team, Cleveland can’t trade Irving for better players now and significant long-term assets. The Cavaliers could try to straddle both paths, but the more they prioritize the future, the less they’ll get for the present (and vice versa).

I’m a little surprised the Cavs aren’t posturing about not trading Irving to drive up his value – especially after the leak – and I’m surprised they’re not pushing in for next year. A championship lasts forever, and they’re still contending.

But it seems they’ve chosen their course. The big danger: It reduces their ability to win this year and pushes LeBron further out the door.

Reading that description of Cleveland’s target, does anyone fit better than Andrew Wiggins – whom, in a strange twist, the Cavaliers drafted then traded for Kevin Love? The 22-year-old is seen by many as a rising star, and his value is in Irving’s general range. Plus, not only did Irving list the Timberwolves among his preferred teams, Jimmy Butler (a friend) and Karl-Anthony Towns are urging Minnesota management to deal for Irving.

The Wiggins we’ve seen so far – an underwhelming defender and 3-point shooter – would fit poorly with LeBron. Wiggins is young enough to develop and adjust, but LeBron’s free agency is only a year away. It’s a dangerous time to take a step back.

But if the Cavs are going to trade Irving for a young player, that’s almost certainly what they must do.