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

29 Comments

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.

Aging Pelicans’ owner couldn’t remember Anthony Davis’ name in deposition

Getty Images
Leave a comment

Tom Benson, the now 90-year-old owner of the New Orleans Pelicans and the NFL’s Saints, a few years back changed around the succession of control of the team after his passing — his wife Gayle will take control. Rita Benson LeBlanc, Benson’s granddaughter and former handpicked successor, sued saying Benson had been manipulated. After meeting privately with Benson, a judge ruled that while Benson suffered some “cognitive impairment” he was capable of making his own decisions and that Gayle remained the successor.

Benson has been sued multiple times since then, including by former Saints employee Rodney Henry, and the then-89-year-old Benson was deposed in that case last year.

Someone broke the gag order and sent a copy of the deposition to The Advocate of New Orleans, and it shows that Benson’s mental acuity is fading. He couldn’t remember who Anthony Davis was by name.

During another set of questions, apparently aimed at establishing how close Benson and Henry had been, Benson was shown a photo of the two men with Pelicans star Anthony Davis.

“Who is this?” Williams asked.

“It’s Rodney and a basketball player,” Benson said. “Oh, hell, I forget his name. Let me — he’s a great player for us. Tell me his name, and I will tell you yes or no.”

When asked “is it Anthony Davis,” Benson said yes. The man is 90, I’m not sure that we should expect much. He had the foresight to bring in people to run his businesses — including his sports teams — and set up a line of succession for when he does pass. Smart moves.

Would Benson’s mental state impact potential changes coming to the Pelicans? Probably not. New Orleans’ GM Dell Demps bet big on going big in a league trending smaller, pairing Davis and DeMarcus Cousins. If that doesn’t work out, plenty of people around the league expect a house cleaning on the basketball side with the Pelicans. Benson’s mental state, whatever it may be, does not impact that.

The deposition leak came from an anonymous source (and anonymous email account, the paper verified the document before publishing). Who leaked it? It may be nearly impossible to find out, but only one side benefits from all this becoming public. And it’s not Benson.

K.J. McDaniels signs with Raptors for camp, can he make roster?

Getty Images
1 Comment

A few years back in Philadelphia, the athletic K.J. McDaniels was a highlight factory and looked like a guy who could develop into a role player on the wing in the NBA.

Except, he never actually developed. Houston gave him a chance (three years at a total of $10 million), and it didn’t work out, then last season Brooklyn had him for 20 games, but they decided to move on.

Now Toronto is going to give him a chance, reports Adrian Wojnarowski of ESPN.

McDaniels’ agent later confirmed the news. This is a training camp, make-good contract for McDaniels. But unlike a lot of those contracts being handed out around this time, there is space on the Raptors roster for a player or two.

McDaniels will compete with Alfonzo McKinnie, Kennedy Meeks, and Kyle Wiltjer for one of the final roster spots in Toronto. Of that group, I’d most likely want to keep McDaniels because of the shot blocking and his potential — but his outside shot has to improve.

The Raptors can carry 15 on the roster and very possibly will until at least Jan. 10, which is the date these partially guaranteed deals become fully guaranteed for the season. Toronto is flirting with the tax line, and ownership is not going to want to pay the tax for this team, so if they do carry 15 they likely will cut it to 14 by that date.

Watch James Harden do the #DriveByDunkChallenge from a speed boat (VIDEO)

Getty
2 Comments

The #DriveByDunkChallenge has been a fun distraction this summer. If you don’t know what it is, it essentially involves NBA players jumping out of their cars to dunk on regular folks on community basketball hoops.

Players like Boston Celtics wing Jaylen Brown have led the charge in the social media video fad, and now it appears that Houston Rockets guard James Harden is setting a new trend.

That trend? Doing the #DriveByDunkChallenge from dang boat.

Yup, seriously.

Via Twitter:

I can’t think of anything more baller than dunking on somebody from a speed boat, so congrats to Harden for winning the NBA offseason.

Photoshop no more: here’s Gordon Hayward in a Boston Celtics uniform (PHOTO)

Getty
2 Comments

I suppose it will take some time to get used to seeing Gordon Hayward in a Boston Celtics jersey. This photo is the first step on that journey.

In a photo posted to Hayward’s Instagram on Wednesday, many of us got our first look at the former Utah Jazz forward in his new digs.

Specifically, the new Celtics Nike jersey in green with the GE patch on the left shoulder.

Via Instagram:

🍀🔥

A post shared by @gdhayward on

There are still some serious doubts about whether the Celtics will be able to unseat the Cleveland Cavaliers in the Eastern Conference, but perhaps they won’t need to wait for long. Rumors are starting to trickle in about LeBron James leaving Ohio, so maybe by the time we are used to seeing Hayward in Celtics green next season they will have less competition out east.