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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.

Kings GM Vlade Divac on Rudy Gay’s communication complaints: ‘He has my number’

Vlade Divac
AP Photo/Rich Pedroncelli
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Rudy Gay complained about how the Kings are handling the trade rumors swirling around him.

Sacramento general manager Vlade Divac, via James Ham of CSN California:

“He has my number,” Divac told CSN California. “If I do something, I will call him. Obviously, if I didn’t call him, we didn’t do anything.”

“Look, I was a player, 16-17 years in the league, nobody called me everyday and tell me what management is doing,” Divac said. “Management was doing their job. If something big happened, they called and told me. Obviously, nothing big happened (so) I’m not going to call anybody.”

I suppose Divac can take that tack. He’s obviously not obligated to provide Gay regular updates.

But the Kings already have a reputation for putting their players in bleak positions. This doesn’t help.

Even if Divac feels calling Gay is going out of his way, so what? The alternative — Gay either coming to training camp unhappy or spreading word of Sacramento’s mistreatment of players to his new teammates after a trade — is far worse.

It’s not enough for Divac to just wait for Gay to call him — especially because Divac might not be as reliable with the phone as he thinks.

Union to fund health insurance for retired NBA players

LOS ANGELES, CA - FEBRUARY 23:  Professional basketball player Chris Paul commentates during the CP3 PBA Celebrity Invitational Charity Bowling Tournament presented by GoBowling.com at Lucky Strike Lanes at L.A. Live on February 23, 2016 in Los Angeles, California.  (Photo by Imeh Akpanudosen/Getty Images for Professional Bowlers Association)
Imeh Akpanudosen/Getty Images for Professional Bowlers Association
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The National Basketball Players Association has talked for more than a year about covering medical expenses for retired players.

Today, the union announced a formal plan.

NBPA release:

The National Basketball Players Association (NBPA) announced today that its player representatives have voted unanimously to fund health insurance for all retired NBA players with at least three years of service in the league. This program is the first of its kind among North American professional sports. It also exemplifies the NBPA’s focus on the health and welfare of its current, retired and future members.

“The game has never before been more popular, and all the players in our league today recognize that we’re only in this position because of the hard work and dedication of the men who came before us,” said Chris Paul, NBPA President and nine-time All-Star. “It’s important that we take care of our entire extended NBA family, and I’m proud of my fellow players for taking this unprecedented step to ensure the health and well-being of our predecessors.”

The unanimous vote – which took place during the NBPA Summer Meeting in New York on June 26 – established a multi-faceted health insurance program through UnitedHealthcare, the country’s leading health benefits provider. The current proposal includes:

  • Retired players with between three and six years of NBA service time but who are not yet eligible for Medicare would be offered a plan that includes medical, hospital and prescription drug coverage with modest out-of-pocket costs for deductibles and co-pays;

  • Those with between seven and nine years of service would be offered the same coverage with even lower out-of-pocket costs;

  • Retired players with at least 10 years of service would be offered the same coverage as the seven-to-nine year players, and would include coverage for their entire family;

  • Retired players with three-nine years of service who are eligible for Medicare would be offered a $0 deductible and $0 co-pay plan along with a low-cost prescription drug plan; those with 10+ years of service to receive this coverage for themselves and their spouse.

  • The open enrollment period for retired players would begin this fall, with coverage beginning on January 1, 2017.

This is a good thing.

It also could become a bargaining point in Collective Bargaining Agreement negotiations. Should current players face the entire burden of insuring retired players, or should owners split the cost? (The fact that the question is even being posed paints players in a positive light.)

But back to the bigger point: This is a good thing. It’ll help retired players who need it, retired players who helped position the current generation to afford this. Kudos to the union for stepping up.

Report: Bulls’ Cristiano Felicio ‘strong favorite’ to replace Anderson Varejao on Brazilian Olympic team

CHICAGO, IL - FEBRUARY 19: Cristiano Felicio #6 of the Chicago Bulls looks to pass against the Toronto Raptors at the United Center on February 19, 2016 in Chicago, Illinois. The Bulls defeated the Raptors 116-106. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using the photograph, User is consenting to the terms and conditions of the Getty Images License Agreement. (Photo by Jonathan Daniel/Getty Images)
Jonathan Daniel/Getty Images
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Warriors center Anderson Varejao will miss the Rio Olympics due to a back injury.

Where will Team Brazil turn now?

Likely to Bulls center Cristiano Felicio.

Marc Stein of ESPN:

Felicio came on strong late last season. He puts his 6-foot-10, 275-pound frame to good use protecting the paint and rebounding. He showed potential as passer and mid-range shooter, too.

At age 24, he’s a candidate to break out in the Olympics.

If he’s not ready, Brazil can turn to a steady veteran at center, Nene.

Report: Equipment staffer punched by Blake Griffin no longer works for Clippers

Los Angeles Clippers forward Blake Griffin stands on the court as equipment manager Matias Testi, left, stands behind the bench during the second half of an NBA basketball game, Thursday, Feb. 18, 2016, in Los Angeles. Griffin broke his hand last month when he punched Testi in the face. The Clippers won 105-86. (AP Photo/Mark J. Terrill)
AP Photo/Mark J. Terrill
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Blake Griffin broke his hand punching Clippers equipment manager Matias Testi in January.

Make that former Clippers equipment manager Matias Testi.

TMZ:

The L.A. Clippers equipment staffer who was punched in the face by Blake Griffin during a fight in Toronto earlier this year is off the team — and will NOT be back for the ’16/’17 season … TMZ Sports has learned.

We spoke with a rep for the Clippers who confirmed Matias Testi “no longer works for the team.”

#Family