Tag: City of Sacramento

NBA executives, Mayor Johnson, and Gavin Maloof meet

Kevin Johnson to Maloofs: There will be no negotiations during critical Friday meeting


I wrote on Thursday about the recent developments in the Sacramento Kings arena situation, and namely the Maloofs’ recent actions that amount to a legal full court press designed to land the franchise in Anaheim. The quick and dirty to catch you up is this – the Maloofs, Sacramento, AEG, and the NBA came to an agreement in principle on a $391 million Entertainment and Sports Complex during All Star weekend. A few weeks ago, the Maloofs publicly refused to pay for pre-development costs totaling $3.26 million that were agreed upon during that time. The Maloofs are the only party that disputes that they agreed to the amount, and the dispute has landed at the NBA Board of Governors meeting, which is where we pick up.

The Maloofs pitched at the BOG meeting for about 90 minutes yesterday, and afterwards they disappeared through a side exit not to be found by reporters guarding the various orifices of the St. Regis Hotel in Manhattan.

Dale Kasler of the Sacramento Bee provided this report following the meeting:

In particular, the Maloofs have said they never agreed to contribute $3.26 million toward environmental studies and other “pre-development” costs, as the term sheet says. Spokesman (Harvey) Englander declined to elaborate on the Maloofs’ presentation, other than to say the topic of relocation didn’t come up. “They asked good questions and it was a very good meeting.”

Earlier, Englander said the family would present a “historical analysis of the transaction” to owners, and hoped to have a clear path set toward a deal by the time the meetings end on Friday. Englander said it could take days or weeks, however, to come to a resolution.

On one hand, if you take the statement at face value, it’s encouraging for Kings fans that the topic of relocation didn’t come up.  But the last part about ‘days or weeks’ is where the rub lies, as it reflects the Maloofs’ position that there is still more to discuss about a deal that was already supposed to be done. During this departure from the handshake agreement, the Maloofs’ actions have become increasingly adversarial and this has culminated in Sacramento business leaders asking commissioner David Stern to remove them as owners. From the city-side, nothing is up for grabs, and the parties opposite the Maloofs have stood united in maintaining that the major elements of the deal aren’t going to change.

So what exactly transpired during the closed door session at the BOG meetings on Thursday? We’re still flushing that information out, but David Stern apparently setup a meeting between mayor Kevin Johnson and the embattled family. This was announced mid-day Thursday after the meeting had concluded, by Maloof family spokesman Englander, no less:

“The commissioner said the mayor (Kevin Johnson is) flying out, taking the red eye, (and) suggested we meet with him. And we are,” said Englander.

Questions swirled once the vague itinerary of events was disclosed to the public. What did Stern and the owners tell the Maloofs? Did they tell them to go kick rocks, to take the deal that they had already negotiated? Did they tell the Maloofs that they could indeed try to make a change to the main elements of the deal after the fact? And under what pretenses would Johnson and the Maloofs be meeting?

Clearly, there had to be a plan other than to stick the two parties in a room only to see them storm out 20 minutes later.

After about six hours of radio silence, Kevin Johnson’s office released to PBT a letter they sent to the Maloofs regarding Friday’s meeting. In the letter, Johnson made it entirely clear that he does not plan on negotiating when the sides meet up. Here are selected excerpts and the entire text:

I understand that during today’s NBA Relocation Committee you and your team made a presentation. During the discussion, it was suggested that a meeting with me tomorrow might be beneficial. As has been my commitment throughout this process, I am always happy to meet in the spirit of open communication and partnership. However, in advance of our conversation, I believe it important to make clear several key points:

First, all parties agreed to a deal in Orlando on February 27th, codified in the term sheet subsequently approved by our City Council. At the time, George Maloof explained the Maloof Family’s reason for agreeing to the deal, saying to the Sacramento Bee that it is a “fair deal…worth taking.”

Any representation that a deal was not reached is simply not consistent with the perspective of every other party to the negotiation nor the actual statements of the family.

Second, throughout this process, we have worked closely with the NBA as a valued partner at your request, as documented by the following Kings’ public statements that the “NBA take the lead on this” while remaining “in very close contact with the league” and being “apprised of everything that’s going on.”

Third, and most critically, under no circumstances will the City make material adjustments to the current terms of the deal. Put simply, we have done our part. And there should be no expectation in tomorrow’s conversation that this deal is subject to further negotiation.

We take you at your word that you are committed to Sacramento as you’ve said repeatedly in recent weeks. The best – and only – way to demonstrate that commitment is to honor the “fair deal” as all other parties have done. Your handshake is your handshake. Your promise is your promise.

So let the games begin. The Maloofs’ statement that it could take days or weeks to come to a resolution reeks of haggling over the price of clear coat, and it remains to be seen how much negotiating the NBA is going to actually permit here. For example, negotiating over a small stipulated clause involving little to no dollar value is probably on the up-and-up. On the other hand, should the Maloofs say they want to pay $25 million and not the $73 million they’ve already committed – that would definitely be a non-starter.

Right now, the argument is over $3.26 million in pre-development costs, or one year of Travis Outlaw’s salary. Before the Maloofs’ legal maneuverings started to resemble that of a family that wanted to get out of Dodge, I had surmised that the family’s argument over pre-development costs was really designed to extract a concession down the road.

And now it doesn’t matter if it’s up-front costs or back-end revenues, though, because Johnson is not negotiating. Sources in several different arena camps have made this much clear, and if it wasn’t clear Johnson’s letter was loud and clear. The only real question is – how much juice does Johnson have?

This is one of two things for him. One less settling possibility for Kings fans is that this is Johnson’s line in the sand, a way for him to say to his constituents that he wouldn’t back down. In this case Johnson believes (and he is right) that the city of Sacramento has done enough, and for better or worse he’s going to stand on that principle at least for now. So he draws the line in the sand with the hopes that the odds are in his favor, that the NBA and other owners will recognize that the city has done their part, and not allow the Maloofs to exit stage right.

Then there’s possibility No. 2, which is much more likely in my opinion, and that is that Johnson has already taken his cues from commissioner Stern. He isn’t gambling with the years of work completed by all of the various stakeholders. He isn’t gambling with all of the political capital he has spent on getting an arena deal done. He isn’t gambling with the political capital spent by all of his colleagues and he certainly isn’t putting the entire project on the line with a take-it-or-leave-it demand that isn’t rooted in reality.

In other words he knows that his price is firm, and he’s not buying the clear coat.

We’ll see later Friday who had the juice and for the Maloofs, if the juice of owning an NBA franchise is worth the squeeze.

David Stern comments about Kings arena situation with typical coded message

team maloof with stern

David Stern took a moment to address the Kings arena situation in Utah before Wednesday’s game against the Suns. Brian Smith of the Salt Lake Tribune has been a great resource for the Kings arena information and he brought this quote to print:

Stern on how he feels about the Kings staying in Sacramento, compared to when a tentative deal was reached during All-Star weekend:

You know, I’m more hopeful than I am confident right now. I’m hopeful because the city of Sacramento has between last meeting and this, has been responsible for responding on a sponsorship basis, on a ticket basis and on allocating $250 million or so for a new arena. In basically a week — what’s today? Wednesday — in a week, our owners will be coming in for meetings next Thursday and next Friday, and we’ll be having the Maloofs in to talk with some group of them and we’ll see where it’s going. Very, very hopeful that it gets on track, because the owners have a respect for the Maloofs. And I think the owners also have an enormous respect for what Sacramento has done over the years in supporting an NBA franchise. And it’s always been our first preference — particularly when government agencies or states are helpful — to keep a team where a team is if they’re playing in a good facility.

Despite Stern’s downgrade from ‘confident’ to ‘hopeful,’ this should come across as pretty good news to Kings fans. The city has hit all of the marks on Stern’s list, and by making remarks about how the owners respect the Maloofs – he’s making the not-so-subtle implication that he expects them to continue earning that respect.

As I wrote earlier today, all eyes will be on the Board of Governors meetings on April 12-13 when the NBA is expected to decide what to do about the Maloofs’ recent refusal to pay arena pre-development costs.

Sacramento City Council passes most important vote to keep Kings in town


I interviewed Carmichael Dave, the person most synonymous with Sacramento’s grassroots effort to keep their basketball team, way back on April 5, 2011. The Kings were all-but gone by most accounts, and I asked Dave what he thought the Kings’ chances of leaving were.


It turns out that he might have been a bit optimistic, as there wasn’t a soul on record, including mayor Kevin Johnson, that thought the Maloofs would keep their team in the Cowbell Kingdom.

And during the Kings’ final game last year, when the Lakers were up by 20 points in the first half and the team was honoring its lifelong season ticket holders with the future not just in doubt, but in the trash – I thought to myself, ‘This is what it’s like to watch your own funeral.’

Even the Lakers fans that had gathered that night stopped giving Kings fans the business. They knew when enough was enough. 2,000 or more people stayed after the game, refusing to leave the arena. Players, coaches, media, management, and anybody affiliated with the team all stayed back to take in the scene. Grown men, including then coach Paul Westphal and TV commentators Grant Napear and Jerry Reynolds – they cried. They weren’t the only ones.

In the background, people were working, though. Some of those people had great influence and some of them had simple tweets. Together, and with no one part being able to complete its work without the other, they were able to keep their team and by virtue of that – give their region hope for a better day.

Tonight, the Sacramento City Council voted 7-2 to approve the term sheet drawn up by all of the stakeholders of the $387-400 million Entertainment and Sports Complex. The wheels could theoretically spin off, but there are 5-of-9 votes in the council that are rock solid in favor of the arena. The other four votes range from serious opposition to only mild opposition, as evidenced by two of them crossing the line tonight. In addition, tonight’s vote will put the project in real motion, with more money being spent as the city finalizes the parking portion of its contribution.

And aside from all of that, sources from each side of the table indicate that they are a full go and the Kings are staying in Sacramento.

It was a moving scene, having interviewed many of the fans, stakeholders, city leaders, and the like for over a year. These people spent hundreds of hours not just to protect a basketball team, but to keep their region from going under. The Sacramento area, having relied on the public sector for decades, has been beset by 12 percent unemployment and big-name companies are leaving weekly.

Or maybe the word is ‘were.’

Kevin Johnson, the hero in all of this, was able to raise an additional $10 million in sponsorships before the plane hit the ground for last year’s NBA Board of Governors meeting. With some help from Jerry Buss and Donald Sterling, Johnson was able to convince David Stern and the NBA that Sacramento could be a viable place for an NBA team – and that most importantly that he could deliver on an arena.

He formed a coalition that included business leaders, fans, churches, various ethnic groups, and heavy hitters from the political world that had a vested interest in keeping Sacramento afloat.

He floated the name, ‘Burkle.’

And I don’t know when Johnson whipped the city council to determine whether or not he had their votes, but he knew that if he kept the ball moving that good things would happen.

When the motion to approve the term sheet was made last night, 500-1000 arena supporters packed two floors of the new city hall and one floor of the old, adjacent city hall. The opposition had its chance to speak first and 19 of the two million people in the Sacramento region spoke out against the arena deal. In the interests of time K.J. limited public comment in support of the arena to 45 minutes. When that time ended, he asked those that didn’t get a chance to speak to stand up.

Nearly everybody in each room stood up.

After public comment, as each councilperson spoke it became clear where each of them stood.  When two opposition votes from the last motion moved over to the pro-arena side it was clear that the Kings were going to stay. A full year’s worth of anxiety and effort started to settle, and with one more moment to go – the room looked tired and worn out. Sensing that it was time to vote, though, they sprang into action and started waving their signs.

The payoff was near.

The roll call vote meant that each councilmember would have to say their vote out loud, and when it was Johnson’s turn to give the final vote he screamed ‘YES’ into the microphone.

It was somewhat anticlimactic since we knew the results weeks ago, but it was his Braveheart moment. And Carmichael Dave had a Braveheart moment when he stood on a 12-foot ladder and told 2,000-plus fans that they had to leave the arena but not to give up hope. And each of those fans that organized en masse, made documentaries, and wouldn’t give up – they had their Braveheart moments, too.

That’s the best part about this story, aside from the happy ending. Faced with a less than 10 percent chance of success these people banded together, did something, and might have staved off long-term erosion of their economy.

And if the Kings can play some winning basketball, that will be a close second.

Kings Arena Update: Critical Sac City Council meeting postponed at last minute


It’s been a while since we checked into the Sacramento Kings’ arena situation, which almost faced another crucial moment on Tuesday when the Sac City Council meeting was set to turn into a shootout at the Cowbell Corral.

On one side, arena opponent and council member Sandy Sheedy was ready to force debate on whether or not the city should hold a public vote on the issue in June. On the other side sits a city council that I’ve profiled in the past as being receptive toward approving the approximate $400 million Entertainment and Sports Complex. Only one other council member, Darrell Fong, has joined Sheedy in voting against a handful of critical procedural issues so far. If a new arena deal is not finalized by March 1, the NBA and Maloofs are going to move the Kings to Anaheim.

By the way the city charter in Sacramento is set up, the elected representatives of the city council are supposed to vote on matters like these. Sheedy wants to depart from that history and bring the vote to the public, knowing full well that a vote in June would be pointless because the Kings would already be gone.

Why is she anti-arena?  It’s certainly not to save money for the city or to stand for economic principals. Sheedy is widely believed to be seeking political revenge against Kevin Johnson after she supported his run for mayor, but did not get a seat in his inner circle. Her seat is also up for grabs in the next council election, and with her district in economic chaos many of the city insiders I have spoken with don’t like her chances to repeat. This is her Hail Mary attempt at taking a position that is different from the pro-arena stance of her challengers, while trying to capitalize on an anti-arena sentiment that may or may not exist. It’s a gamble, but it’s also Sacramento politics at its finest.

More importantly to the reporting of whether or not it will be the Sacramento Kings or Anaheim Royals, Tuesday was going to force city council members to speak on the record about the arena once again. Specifically, they would have to either support or defend Sheedy’s obstructionist play. And just like the past meetings where council members were mostly transparent about their goals, we were going to get a real good read on where folks stood.

That is, until Ryan Lillis of the Sacramento Bee reported that Sheedy called a timeout.

Apparently known arena proponent and councilman Rob Fong couldn’t make Tuesday’s meeting and Sheedy wanted the entire council to be present. Maybe this is a simple coincidence, but with the clock ticking it also wouldn’t be surprising if the absence is related to her opposition. If we’re going down that road, it won’t be surprising to see her gain something in relation to the arena issue as well as her campaign, with the delay setting the stage for her to gracefully back off.

Then again, maybe Fong had business to attend to and Sheedy is going to both reschedule and show up dressed as a purple Grinch.

Either way, we’ll find out soon if Sacramento has the money and votes to pull off one of the bigger saves in modern civic history.

NBA doing the Maloofs’ talking for them

Los Angeles Lakers v Sacramento Kings
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The Maloofs’ relationship with Sacramento is decidedly love-hate. When the Kings were winning and Joe and Gavin were plastered on TV during games, Sacramentans were ready to propose.

But it’s funny how life works — the team started losing and (gulp) started asking the city of Sacramento for money, and everything has been downhill since. Their 2006 ill-fated measure to finance an arena was a PR disaster. Now the relationship they have with fans after a failed attempt to get out of Dodge in April is well, think Elin Nordegren and Tiger Woods having dinner at Thanksgiving with their children.

It’s all about the Kings, so I won’t throw this turkey leg at your head.

In all fairness, the Maloofs have dealt with a city that has acted like NBA franchises grow on trees and that people will gladly pay property taxes absent the consideration of amenities.  But let’s not get into details, because who cares about those?  After all, more than half of the basketball public believes the players are ‘on strike’ because Ron Artest and Stephen Jackson ran away with all of the dollar bills to make it rain with.

Nevertheless, it wasn’t surprising in the least to read Rob McAllister’s latest report on KFBK.com about the big meeting in Dallas between arena-related parties. McAllister reports that yesterday the city of Sacramento, NBA representative Clay Bennett, AEG, and others met to lay out parameters, timelines, etc. You know, arena stuff.

But is he forgetting somebody? I’ll let McAllister take it from here:

The Maloof family was not at the meeting in Dallas and there is no time table that currently details when the Kings’ owners will join the negotiations. (Sac City Councilman Rob) Fong said he expects the “Maloofs to be a part of the talks,” even though the city has been dealing directly with the NBA.

If you recall, the NBA kindly told the Maloofs to give Sacramento one more year to get an arena, after Kevin Johnson came up with $10 million in corporate sponsorships and an eleventh hour plan – while simultaneously fans pulled a ‘hell no, we won’t go.’

Make no mistake, it’s not typically the NBA’s protocol to block a team from moving, particularly if the old city has balked at building a new arena. As long as the supply for NBA teams is restricted, and the demand for teams remains high, then the NBA will always have that leverage (see antitrust: reasons why the NBA wants never to speak of it).

So telling the Maloofs to get back in the negotiating seat would normally mean that they, ya know, sit at the table, right? Wrong.

This time Ron Burkle and prospective buyers lurk in the background behind Kevin Johnson’s promise that Sacramento can be an NBA city. The Maloofs, hit hard by the economy, have sold all but two percent of the Palms, and what had once been rumors was finally put into print when NBA insider Jonathan Abrams wrote at Grantland that they “would have likely been forced to sell had they relocated to Anaheim, which remains a distinct possibility.”

Even at city council meetings, where opponents of the arena initiative would normally rail against giving money to rich people, they’re now talking about the various uses of public funds rather than making it about the Maloofs. And arena proponents barely even talk about the Kings these days. Instead, they talk about the A-list acts that will go to the Bay Area if an ‘Entertainment and Sports Complex’ isn’t built, and the millions being lost in Sacramento property tax revenue that a new ‘Entertainment and Sports Complex’ would address according to top economists.

The Maloofs have made just a handful of public comments regarding the process since it was decided that they would stay, and nothing that would make the 10 o’clock news.

For a family that doesn’t exactly lay low, it’s almost like they’re not there, complicit with the idea that their presence could somehow derail things in Sacramento.

It’s a pretty simple decision to hide the Maloofs, given their past history with arena initiatives, the threat of moving, and the like, but as Abrams alluded to there is more at play here.

As much as you would like to hide the Maloofs if you’re Sacramento and the NBA, any owner would be expected to be involved in a process like this, and their representatives would certainly be at meetings of this type. In this case, Bennett is there instead to keep things on track.

The NBA has invested a ton of time in getting an arena deal in Sacramento, and frankly, had they wanted to be in Anaheim they would have simply let the Kings go. But there were too many reasons not to go at the time.

Henry Samueli rolled out the red carpet for the Kings and really, really, really wants to take over for the Maloofs if they can’t afford to play with the other billionaires, but he has an image problem. Convicted of lying to regulators in a stock option scandal years ago, he was suspended as an owner in the NHL. He has a history of philanthropy and Donald Sterling is obviously tolerated, but still, it’s a blemish.

Compared to David Stern’s drooling over Ron Burkle, it’s quite clear who the NBA would prefer to pick up wherever the Maloofs leave off, assuming of course Burkle or the other suitors are still interested.

And then there’s the small issue of the lockout. Back in April the NBA was preparing to ask the Jerry Busses of the world to dish out some pie in the form of revenue sharing – not exactly the right time to plunk a team in his back yard. In fact, there may be no right time to do that if the NBA quadruples revenue sharing – at least not for a while. Don’t tell that to Sacramento, though, since Anaheim is still being dangled over their head (not like a carrot, like a guillotine).

Besides, can the NBA really uproot another franchise — after a lockout — when Sacramento has so publicly been supported by just about everybody in the NBA?  And financially, do they really want to abandon the 20th largest market in the United States, just to overlap what they already have in L.A.?

No. Not now. Not under these circumstances. Not if Kevin Johnson can deliver an arena.

So Clay Bennett will show up and lay out the parameters that have likely already been communicated to Kevin Johnson, AEG, and the rest of the team. Johnson and Sacramento city councilman Rob Fong will be there to discuss what they believe can and cannot pass in the council, which ultimately controls Sacramento’s checkbook. The NBA will negotiate on behalf of the Maloofs, but as long as a reasonable plan gets presented by Sacramento, they’ll turn to the Maloofs and say, ‘here it is.’

And they will take it.  Whatever they choose to do with it from there is anybody’s guess.