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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.

Mario Chalmers says he’s cleared to play

Memphis Grizzlies guard Mario Chalmers moves the ball during the first half of an NBA basketball game, Wednesday, Dec. 23, 2015, in Washington. Chalmers was ejected in the first half. The Wizards won 100-91. (AP Photo/Carolyn Kaster)
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Mario Chalmers was thriving with the Grizzlies after a midseason trade from the Heat when a torn Achilles ended his season.

Not the way Chalmers wanted to enter free agency.

Still unsigned, he says he’s progressing.

Chalmers:

Can he go 100%, though? If not, when?

A few teams could use another point guard. If Chalmers shows his health, he belongs in someone’s rotation. But that might require taking a low-paying deal and working his way up from the third point guard spot – or even just onto the regular-season roster.

Report: John Wall ‘rankled’ by James Harden’s high-paying Rockets contract

WASHINGTON, DC - MARCH 29: John Wall #2 of the Washington Wizards is defended by James Harden #13 of the Houston Rockets in the second half at Verizon Center on March 29, 2015 in Washington, DC. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement. (Photo by Patrick Smith/Getty Images)
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Bradley Beal isn’t the only player bothering John Wall.

James Harden – who’s earning a lot of money from the Rockets and adidas – is drawing the ire of the Wizards point guard.

Kevin O’Connor of The Ringer:

One league source familiar with Wall’s state of mind simply put it this way: “Wall’s got jealousy issues. He’s always upset with someone who makes more money than him.”

A front office executive tells The Ringer that Wall was “rankled” after Harden signed a four-year, $118 million extension with the Rockets.

O’Connor also pointed out this line from Nick DePaula of Yahoo Sports on Wall rejected adidas’ offer:

“He wanted Harden money,” a source told The Vertical.

I wonder how Wall feels about Beal’s max contract, which pays much more than Wall’s deal. Wall didn’t like Reggie Jackson, another lesser player, earning the same amount as him.

The union rejecting cap smoothing in light of the new national TV contracts has certainly adversely affected Wall, who locked in long-term just before the salary cap explosion became known. As other players sign huge contracts, he’s stuck on his old-money deal.

Washington could’ve renegotiated and extended Wall’s contract, but it would have been more complicated than Harden’s arrangement. Wall has three years remaining to what was previously two for Harden. How much extra money would the Wizards have paid Wall over the next three years just to get him committed for one more year? Instead, they signed Ian Mahinmi, Andrew Nicholson and Jason Smith.

I’m also unsure Wall would’ve accepted an extension. He doesn’t seem overly happy in Washington, and a raise via renegotiation was coming only if Wall provided something in return – an additional year of team control added to his contract.

And don’t lose track of this: Harden is better than Wall.

I don’t mind Wall monitoring other players’ contracts. That jealousy or whatever you want to call it has driven Wall to become a star NBA player. Whatever motivation works.

But demanding Harden’s deal is unrealistic. The Wizards also ought to be mindful of how Beal’s new contract affects chemistry, but that’s their problem.

Wall’s issue – as a player, not endorser – is primarily theoretical. He’s tied to his current contract, and lesser players will earn more than him due simply to timing. He must find a way to make peace with that.

51Q: Is there any reason the Jazz won’t be really good?

LOS ANGELES, CA - NOVEMBER 25:  Gordon Hayward #20 of the Utah Jazz celebrates his three point during a timeout with Derrick Favors #15 and the bench at Staples Center on November 25, 2015 in Los Angeles, California.  (Photo by Harry How/Getty Images)
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Today is day two of PBT’s 2016-17 NBA preview series, 51 Questions. Between now and the start of the NBA season we will tackle 51 questions we cannot wait to see answered during the upcoming NBA season. We will delve into one almost every day between now and the start of the season (we’re taking some weekends off). Today:

Is there any reason the Jazz won’t be really good?

The Utah Jazz barely missed the playoffs last season, but virtually no team in the middle tier of the league is as universally adored for their direction. They’re well-coached by Quin Snyder, have a roster that makes sense together and made sensible moves this summer to get better. Barring injuries, they should be a lock to make the postseason for the first time since the 2011-12 season.

In the non-Warriors category, it’s hard to argue that very many teams had better offseasons than the Jazz when it comes to filling holes on their roster without giving up any core pieces. Utah’s weakest position last season was point guard — with Dante Exum out for the year rehabbing a torn ACL, things got so bad that a midseason trade for career backup Shelvin Mack was considered a major upgrade. This summer, they flipped a lottery pick they didn’t really want to Atlanta in a three-team deal that got them George Hill, as solid a starting-caliber point guard as would realistically be available for them. Hill’s playmaking and outside shooting immediately improve Utah’s offense and gives Snyder a rock-solid veteran to take pressure off Exum coming back from missing a full year of action. Even if the Jazz view Exum as their long-term answer at point guard, it’s going to take him a full year to get back up to speed, and having Hill means he has to do less right away.

The Jazz’ other major upgrade came with the signing of seven-time All-Star Joe Johnson to a two-year, $22 million deal. Johnson isn’t a first or second option on offense anymore at this point in his career, but as a veteran scorer off the bench, he can still be effective and should be a great fit in the offense. Taking on Boris Diaw‘s contract could prove savvy, too, if he’s as engaged as he was in San Antonio.

Beyond the roster upgrades, the driving force of all the Jazz optimism this summer is how well all of their young pieces fit together, and the potential for improvement from all of them. Nobody knows what Exum will be, but even if Utah gets nothing out of him, they have an enviable core just entering its prime. Rudy Gobert is one of the most lethal rim protectors in the league at 24 years old. Derrick Favors has developed into an excellent all-around power forward. Gordon Hayward and Rodney Hood provide a potent scoring combo on the perimeter, and if Alec Burks is healthy, he can help there too.

The Jazz are also the beneficiaries of the shifting balance of power in the Western Conference. The Thunder lost Kevin Durant and while they’re probably still a playoff team, they’re far from a lock. The Blazers spent a lot of money but didn’t necessarily get better, and may have overachieved last season. The Timberwolves, despite having arguably the brightest future in the league, are still probably a couple years away. The Rockets and Grizzlies are still total question marks, and the Pelicans haven’t been able to construct a solid group around Anthony Davis. Meanwhile, the Jazz are sitting there with the least downside of any of these bubble teams, not a lot of rotation question marks and play in a division without a clear-cut favorite.

Nobody thinks the Jazz are going to be title contenders, but looking up and down the west hierarchy, there isn’t a team that the Warriors or the Spurs should want to face less in the playoffs. And this year, they have the depth to get there.

Ryan McDonough: Suns plan to be ‘major players’ in 2017 free agency

Ryan McDonough
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The Suns have swung big in free agency the previous couple years, chasing LeBron James and Carmelo Anthony in 2014 and LaMarcus Aldridge in 2015.

But 2016 appeared to be the year Phoenix really eyed.

The Suns structured the contracts of multiple players – including Brandon Knight, Tyson Chandler, Markieff Morris and Marcus Morris – to have salaries that dipped this summer. Time that flexibility correctly, and it can really pay off.

Phoenix big prize? Jared Dudley.

Dudley is a nice player, but he’s hardly the star the Suns seek. So, they’ll try again next year.

Phoenix general manager Ryan McDonough, via Adrian Wojnarowski of Yahoo Sports:

That’s been one of our frustrations this summer. We were kind of on the sideline for some of the marquee free agents. But as you know, Woj, it wasn’t the deepest free agent class.

Potentially, it’s a very strong free agent class next year. And one of the things we’ve done with our contracts is we’ve lined them up to have max cap space next year without really touching the core of our roster.

I think and I hope at this time next year, we’re major players in free agency. Because as you mentioned, the Phoenix Suns are a destination franchise.

The 2017 free agent class won’t be as strong as hoped.

LeBron James locked in for multiple years with the Cavaliers. Russell Westbrook signed a contract extension with the Thunder. Kevin Durant indicated he’ll re-sign with the Warriors. So has Stephen Curry. Blake Griffin is reportedly “adamant” about re-signing with the Clippers.

Teams will almost certainly match any offer for the top restricted free agents – Giannis Antetokounmpo, Rudy Gobert, Steven Adams and Nerlens Noel – if they don’t extend their contracts first.

That still leaves several quality unrestricted free agents – including Chris Paul, Kyle Lowry, Gordon Hayward and Paul Millsap – but Paul and Lowry are point guards. Phoenix already has Eric Bledsoe and Brandon Knight, and Devin Booker looks like the shooting guard of the future. So, forget simply sliding Bledsoe or Knight to off guard. It’d take a major shakeup for Paul or Lowry to make sense with the Suns.

Still, McDonough’s approach is logical. If he can keep kicking the can down the road, perpetually selling that his plan is a year from taking it hold, it’ll make it easier for him to retain his prestigious job.

But if he has to make his 2017 free agency plan work rather than deferring to 2018, it could be difficult.

The Suns project to have about $17 million in cap space (under a system that could change significantly with a new Collective Bargaining Agreement). Renouncing restricted free agent Alex Len could clear about $12 million more, and just $500,000 of Leandro Barbosa‘s $4 million salary is guaranteed. Trading Tyson Chandler, Bledsoe and/or Knight could open even more space. Losing Len isn’t ideal, but for the right free agent, the upgrade would be worthwhile.

The bigger issue is winning. Phoenix has struggled to lure top free agents, because the team has missed the playoffs six straight years. That’s unlikely, though not impossible, to change this year. If the probabilities hold, what does McDonough sell then?

He always has the option of using cap space to facilitate uneven trades, a route he previously broached. Depending on the deal, that could encroach on 2017 cap space.

But if his plan holds, the Suns will keep their books relatively clear until next summer.