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.

Report: Masai Ujiri’s salary about half what Phil Jackson’s was

Nathan Denette/The Canadian Press via AP
Leave a comment

James Dolan isn’t fixing the Knicks’ biggest problem – James Dolan.

But the owner took a step in the right direction a few years ago by pouring a ton of money into the front office. Of course, Dolan did it in the worst way. Offering a five-year, $60 million contract, he didn’t target general managers with proven track records of success. He hired front-office novice Phil Jackson, whose tenure was a wreck.

With Jackson out, will Dolan get it right this time?

The Knicks are reportedly interested in Raptors president Masai Ujiri, but it will be more complicated now, because Ujiri just signed a contract extension and the Knicks are still paying Jackson.

But can New York lure Ujiri from Toronto?

Michael Grange of Sportsnet:

As a source close to MLSE ownership told me Wednesday morning: “Don’t even waste your time on this.”

But as one NBA source put it: “This is not fake news, the Knicks will be coming hard.”

Sam Amick of USA Today:

Ujiri signed a five-year extension worth $32 million last September

Bruce Arthur of the Star:

All that just makes the Knicks more desperate for a new saviour, and league sources indicate the Knicks are already confident Ujiri is coming to New York.

Despite the contract, sources indicate Ujiri can leave if he wants to leave. It’s really up to him.

Ramona Shelburne of ESPN:

As for reports that the Knicks were interested in Toronto Raptors president Masai Ujiri, sources told ESPN that the Knicks have a deep respect for him, but he’s under contract and thus would require permission to speak to and compensation — likely draft picks — which the Knicks would be very reluctant to consider.

Dolan has the fortune to offer Ujiri a significant raise and buy him out of his Raptors contract. Money goes a long way in these negotiations, though it’s unclear how much Dolan would spend on a less-flashy name – and whether the Raptors want more than just cash.

Sending Toronto first-round picks as compensation would hurt the Knicks, but not as much as hiring another incompetent front-office head.

Will Ujiri land in New York? There are so many mixed signals, but it appears the Knicks at least have a chance.

Report: James Harden recruited Chris Paul to Rockets throughout season

3 Comments

Chris Paul to the Rockets seemed to come out of nowhere.

It didn’t.

Broderick Turner of the Los Angeles Times:

According to one NBA executive, James Harden, the Rockets’ all-star guard, had been recruiting Paul throughout the season. An executive from another team said Harden had already told a fellow NBA player that Paul’s going to Houston was a done deal.

This is how the league works now. James Harden continues to be a enthusiastic recruiter, and that’s a huge asset to the Rockets. It goes toward explaining why Houston general manager Daryl Morey has bestowed so much faith in Harden.

The NBA has simply decided nothing players do constitutes tampering. So, Harden was free to convey Houston’s message to Paul – and this went beyond the typical bonding of two stars. The Rockets had to orchestrate a complex series of transactions, including getting Paul to waive most of his trade bonus, to make the deal work. Harden was part lead recruiter, part middleman communicating with the front office.

Getting Paul was truly the Harden-Morey partnership at its finest.

Report: Thunder have planned Blake Griffin pursuit for months

russell westbrook blake griffin
Harry How/Getty Images
Leave a comment

The Clippers sound confident about re-signing Blake Griffin in the wake Chris Paul going to the Rockets.

But L.A. will have competition for the star forward – from the Nuggets, Celtics (depending how their primary plan goes), Heat and Griffin’s home-state Thunder.

Royce Young of ESPN:

It’s a shame for the Thunder they backed off their plan to sign Griffin last summer, signing Steven Adams and Victor Oladipo to contract extensions, only to resume it a few months later.

Letting Adams and Oladipo hit unrestricted free agency would have given Oklahoma City an additional $22,514,699 in cap flexibility while maintaining Adams’ and Oladipo’s Bird Rights. That alone wouldn’t have been enough to offer Griffin a max salary, but dumping Enes Kanter, Kyle Singler and either Doug McDermott or Domantas Sabonis would’ve projected to get the Thunder there. In that scenario, Oklahoma City could have also exceeded the cap to re-sign Adams and Oladipo after inking Griffin.

Alas, the Thunder are now limited to dumping contributors that make the team appealing to someone like Griffin in the first place or executing a sign-and-trade. But a sign-and-trade gets complicated. Adams’ salary alone isn’t enough to return Griffin on a max, and it’s not even clear the Clippers – with DeAndre Jordan – would want Adams (though losing Griffin could initiate an even greater rebuild that includes trading Jordan). And again, the Clippers reportedly want to keep Griffin rather than go this route.

This was all foreseeable, though some surprising factors worsened the consequences of the extensions for Oklahoma City.

Griffin seemed more certain last summer to stay in L.A. The 2017-18 salary cap appeared on track to be higher. The new Collective Bargaining Agreement won’t raise cap holds for first-round picks until next year. So, Adams’ deal projects to save the Thunder just $6,425,000 over the next four years relative to a max offer sheet – a paltry sum in the face of the potential cap flexibility lost this year by extending him instead of waiting to re-sign him.

The Thunder making moves earlier than necessary and salary-cap developments turning those plans especially imprudent – where have I heard this one before?

Report: Gordon Hayward will meet first with Heat in free agency, then Jazz, then Celtics

Leave a comment

Gordon Hayward is arguably the biggest available prize in free agency, and his dance card for the first couple of days in July is filling up.

Miami and Pat Riley will bat lead off in a series of meetings, reports ESPN.

Gordon Hayward will take his first free-agent meeting with the Miami Heat on Saturday, a source told ESPN’s Jorge Sedano. Hayward will then be traveling Sunday to meet Utah on Monday, with Boston coming after that…

Sources previously told ESPN the Jazz regard the Heat as no less a threat to lure Hayward away than the Celtics, whose interest in the former Butler star has been anticipated for some time, largely thanks to the presence of Hayward’s college coach, Brad Stevens, on Boston’s bench.

For the record, there are rumors it’s Miami Saturday, Boston Sunday, Utah Monday, then he will take some time to make a decision. I’m not sure the order matters that much.

Hayward is an All-Star level player at a position of need for a lot of teams out on the wing. He averaged 21.9 points per game last season, shot 39.8 percent from three, can put the ball on the floor and be a playmaker for himself and others, plus can defend everything from stretch fours to point guards (he’s not a lock-down defender, but he is good). Hayward is the kind of versatile player teams need to compete in a modern NBA. He’s an elite wing player who is about to get paid like one.

The question is by whom? Around the league teams are convinced it will be one of those three, but which one depends on who you talk to. The Jazz seem confident they can retain him, where others seem confident he’s got one foot out the door. Only Hayward truly knows, and he’s wise to not speak on it and take the meetings. (If he takes his time deciding that could impact the chase for Blake Griffin, Miami and Boston reportedly have interest if they don’t land Gordon, but that can’t be Gordon’s concern. He has to do what’s right for him in his own time.)