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.

Gordon Hayward’s agent says return this season unlikely

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Wednesday night in Boston Gordon Hayward underwent surgery to repair his dislocated ankle and fractured tibia suffered just five minutes into the season-opening game, a gruesome injury that put a pall over the rest of the night.

There had been hope from some Celtics fans that Hayward could return this season, likely for the playoffs, but now that the surgery is complete Hayward’s agent told Adrian Wojnarowski of ESPN not to expect him back until next season.

This shouldn’t be a surprise to anyone who saw the injury. Hayward is in the first year of a four-year deal with the Celtics, they were always going to choose a cautious path rather than rush him back. Under Danny Ainge Boston has always taken the long view, even with all their moves this summer — specifically bringing in Hayward and Kyrie Irving — the target was to be the team set up for next as LeBron James and the Cavaliers faded. That plan does not change now.

Earlier in the day, Hayward had sent a video message out to Celtics fans thanking them for their support in the past 24 hours.

Without Hayward, the Celtics now will focus more on smaller lineups, rookie Jayson Tatum will get more run, as will Marcus Smart in his contract year. Jaylen Brown will be thrust into a more significant role. Also, Kyrie Irving will be asked to do more as the team’s second-best playmaker is now out for the season.

The Celtics will take a step back this season without Hayward, who was going to be crucial for them on both ends of the floor. That’s evidenced by their 0-2 start, falling to the Cavaliers and Bucks on the first couple nights of the season. Boston should still be a team well above .500 and in the playoffs, but they will not be quite the same this season.

Trail Blazers beat Suns by 48, biggest season-opening rout in NBA history

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Any controversy over C.J. McCollum‘s suspension for the season-opener should be put to rest. The Trail Blazers fared fine without him.

More than fine.

Portland beat the Suns, 124-76, Wednesday. The 48-point margin is the largest ever in a season opener, even as the Trail Blazers let a 58-point fourth-quarter lead dwindle.

Here are the most lopsided season-openers in NBA history (openers for both teams appearing twice):

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The 48-point defeat is also the Suns’ worst lost in franchise history, topping a 44-point loss to the Seattle SuperSonics in 1988. It could be a long year in Phoenix.

Marcus Smart and Matthew Dellavedova scrap (video)

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Marcus Smart and Matthew Dellavedova thrive on aggravating opponents, so when matched up, of course they aggravated each other.

Deduct points from Smart for pulling the hold-me-back charade behind a referee. Plus, Dellavedova’s Bucks beat Smart’s Celtics, 108-100.

Report: ‘Tremendous concern’ for Jeremy Lin’s knee injury

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The Nets’ projected record this season came under greater scrutiny when the Celtics traded Brooklyn’s unprotected first-round pick to the Cavaliers in the Kyrie Irving trade. After finishing third-to-last and last the previous two years, were the Nets poised to take a step forward, or would they convey a very high pick to the Cavs?

Jeremy Lin, who missed 46 games last season, getting healthy was a reason for optimism in Brooklyn and pessimism in Cleveland. But it appears the veteran guard could be out a while.

Adrian Wojnarowski of ESPN:

Billy Reinhardt of Nets Daily:

If the injury is as bad as feared, what a bummer for Lin. He came to Brooklyn expecting to play a leading role on a developing team, and he just can’t stay healthy.

The Nets were probably more focused on developing their younger players, but – especially without their own draft picks – there was no harm in shooting for the playoffs. This appears to a blow to that (already unlikely) dream.

It’s a boon to the Cavaliers, though. And whenever something significantly affects LeBron James‘ team, it has ramifications into the entire power dynamic of the Eastern Conference. For an injury to a player on a team most expect to be bad, the medical developments here will be tracked closely around the league.