Tag: Kings relocation

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.

Maloofs move significantly to meet Sac’s proposal, Kings fans provide political cover for arena deal to get done


In the end, it was about a city and its team, and the will to fight for what was theirs.

Kevin Johnson did the heavy lifting and the heavy hitters moved the ball forward, but it was the Sacramento Kings fans that gave the local politicians the will and the way to see the Kings arena deal to fruition.

The Maloofs and Johnson emerged from Monday’s arena talks with tears in their eyes and an arena deal ready to go. In speaking with sources on the Sacramento negotiating team this morning, even they did not know that an arena deal was coming back with city manager John Shirey on the flight home.

Moreover, other sources involved with negotiations indicated that the Maloofs moved over $20-$30 million on their position coming into today’s meeting, with Sam Amick reporting that the inclusion of a Maloof-paid ticket surcharge provided the mechanism.

While the symbolic celebration is yet to come (hold onto your hats Sacramento), this marks the end of a year-long journey that saw the Kings all-but leave town. I attended the potential final game in Sacramento against the hated Lakers, and watched as grown men cried and thousands refused to leave the stadium. I listened as some of the media in attendance snickered at the audacity of fans to believe they could keep their team.

Nobody, and I repeat nobody, had the Kings staying in Sacramento.

And because of those resolute fans, everybody from the mayor to the city council, the media and the team, and the ultimately the NBA – were forced to believe that a deal could be done.

They chanted at games and made fliers, they made movies, they attended city council meetings, and they used Twitter like they owned it. There was a group called #HereWeStay that started the social media fire, a local radio host named Carmichael Dave with an affinity for Braveheart moments, and a group called #Fans that delivered human PowerPoint presentations at city council meetings.

And there were many more. They were extremely organized, and they numbered in thousands. And for all the heavy hitters that drove the process, they wouldn’t have gotten past first base if the local media and pols didn’t have the political cover those fans provided. Everywhere you turned, it was #HereWeThis and #HereWeThat, supplemented by the education-driven #FANS group that hammered home the message that the arena was #BiggerThanBasketball.

Indeed, the arena is going to revitalize an area of Sacramento that desperately needs help, boosting the local economy while providing jobs and increased property tax revenue for years to come. It’s the shot in the arm the region needs to get back on its feet, and for once, Kings fans get the win that has eluded them for so long.

There are more steps to go as the term sheet will now be brought home by Shirey and the city council will look it over the next few days. As I reported for ProBasketballTalk last week, as long as a set of achievable criteria is met, they will have at least the five votes necessary to approve a parking plan that will solidify the city’s contribution. The fact is, however, that the city of Sacramento doesn’t walk out of that meeting with a deal not knowing if they have the votes to get it done.

The council will vote on March 6 to approve the term sheet and from there only insignificant procedural votes will remain on the to-do list. The Maloofs will ultimately pay in the ballpark of $70 to $77 million toward the cost of the $387-400 million Entertainment and Sports Complex, which is set to open in 2015. It’s my prediction that we’ll learn about an All Star game landing in Sacto in 2016.

The rest of the details will be fleshed out as the parties return to Sacramento and cross the Ts and dot the Is.

For now though, none of that matters. Kings fans have been on pins and needles for well over a year – and they finally get to take a day off. Even those of us in the media covering the story on a daily basis, we’ll take a breath and just enjoy a good story that ended well. And if you own a bar in the Sacramento area tonight, it’s probably a good time to make some purple beer.

Congratulations Kings fans, the Dom Perignon is in the mail.

Sacramento City Council takes unanimous step toward key arena vote

kings purple

One vote down to bring a new arena to Sacramento, one more critical vote to go.

Tuesday, the Sacramento City Council voted unanimously to continue finalizing proposals with private parking companies, who will in turn provide $200 million or more toward a new Entertainment and Sports Complex. For that money, the winning bidder will have the right to operate the city-owned parking assets for up to 50 years. This is a critical piece of mayor Kevin Johnson’s plan to keep the Kings in Sacramento, and a ‘no’ vote last night would have sent the team packing, though as I reported earlier Tuesday it wasn’t going to come to that.

That report also included a breakdown of the situation and news that the council will have the votes to approve an arena deal before the March 1 deadline, so long as a laundry list of achievable criteria is met.

That criteria, including safeguards on the parking deal and project cost overruns, is going to be worked out over the next two weeks as the city, the private parties, the NBA, and the Maloofs will come together to create a term sheet for the council to vote on. The vote is expected to be held on February 28, but it’s possible, even likely, that the NBA will allow for an extension on their deadline so they can review the terms at a reasonable pace. That announcement could come on All Star weekend.

Tuesday’s vote wasn’t expected to be contentious, but hundreds of Kings fans still showed up to make their case to the council. They wore white T-shirts with words such as growth, economic engine, events, downtown, nightlife, etc, and did their best not to recreate the acoustics in Power Balance Pavilion.

While there were eight speakers signed up make the opposition’s case, mayor Johnson was forced to limit public comment in support of the arena due to obvious time constraints.

After about 20 arena proponents were allowed to address the council, Johnson asked those in support of the arena that didn’t get a chance to speak to stand up and be recognized. Nearly everybody in the double-decker room stood up.

For well over five years Sacramento has been seen as impotent in its ability to get an arena deal done, but even council members that are in opposition of the current deal seemed resigned to their fate. Sandy Sheedy, the most vocal opponent of the deal, put up little to no fight on the issue and the other opponents chose not to speak. Surely they could be saving their breath for when the games count, but in doing so they lost a critical chance to curry favor with the anti-arena crowd, if it even exists.

The vote in 2006 to implement a sales tax for a new Kings arena lost by an 80-to-20 margin, but what most people don’t know is that it was an extremely flawed and eventually abandoned measure that never had a chance.

Tuesday night a strong message was sent to the NBA and competing cities that an arena deal is coming.  Staring into the sea of white T-shirts, with little to no opposition to be found, it was hard to understand how it took them so long in the first place.

Sacramento City Council has votes for arena if reachable criteria is met

Inside Kings Arena

The Sacramento Kings and their fans will hold their breath on Tuesday night, as the Sacramento City Council holds the first of at least two critical votes that will determine whether or not the team leaves town.

Let me be the first to tell you that tonight’s vote will pass.  Sources close to the situation report that the council is all but certain to have the votes necessary to move the process forward.

Specifically, the vote will allow the council to finalize proposals with ten competing private parking operators that will provide upwards of $200 million toward the cost of the estimated $387 million Entertainment and Sports Complex.

This will setup a vote on February 28 that will decide the Kings’ future.  It is at this time that the council, in cooperation with mayor Kevin Johnson’s Think Big Sacramento coalition, will vote to approve a term sheet that will signal to the NBA that Sacramento can indeed fund an arena.

I’m also told by sources with knowledge of the situation that as long as a laundry list of criteria is met, the council will have at least the four votes necessary (not counting Johnson’s tie-breaking vote) to approve the term sheet.

This laundry list includes guarantees that the city’s general fund will be replenished by the approximate $9 million annual revenue stream currently provided by city-owned parking operations, a plan for some or all of the city’s employees to be transferred into the new parking company’s operation, a mechanism to cap rate hikes for parking in the future, an option for an agreement shorter than 50 years, and a mechanism to provide kickbacks to the city if parking revenues exceed certain benchmarks.

It is believed that within that framework, the city can meet or exceed their $200 million target.

The last major item on the laundry list is who will be responsible for cost overruns if the $387 million project goes over its budget.  I’m told the city will approach the developer, David Taylor, to potentially provide that guarantee.  While it is unclear whether or not Taylor would shoulder such responsibility, he will likely be given incentive to do so by an offer of development rights near the arena.

Taylor has been working on the arena deal for years and has evaluated the project for Sacramento at a significant cost to himself, and it would be surprising if he told the council that he would not be responsible for cost overruns on a project he evaluated and promoted – particularly if there is further incentive in the form of development rights.

Adding the estimated $200 million or more from parking, an estimated $30 million from local hotels, an estimated $50 million from an arena operator (AEG), and an estimated $80 million from the NBA and the Maloofs — sources tell me that the city is well in the ballpark of securing the financing necessary for the arena.

In other words, the city of Sacramento has both the will and the way to secure a ‘yes’ vote for an arena.

As far as the timing goes, while February 28 is potentially the date for a deciding vote, it is likely that the NBA will allow for an extension on the March 1 deadline so they can properly evaluate Sacramento’s findings.  That announcement could come during All Star weekend.  The NBA and the Maloofs could theoretically act on the city’s proposal quickly and provide their terms in time for a February 28 vote, but sources stress the important part is that the city will have communicated that it is ready to vote on a deal.

From there it is on David Stern and the Maloofs to pull the trigger on the estimated $80 million price tag, which amounts to about $3 million per year in rental payments for 30 years, all paid up front.

As for any talk of selling the team, The Maloofs have been consistent with their message that it’s not an option, and their sale of the Palms can be seen as either a sign that the ship is sinking or a sign that they were moving money for the purposes of an arena.  In the unlikely event they do want to sell, Think Big Sacramento executive director Jeremiah Johnson told Seattle’s King 5 News that the city has “a number of ownership groups willing to keep the Kings in Sacramento.”

It’s not going to come to that.

The Maloofs and/or the NBA could try leverage the city of Anaheim against Sacramento, who recently made improvements on their NBA-ready facility, but after Jerry Buss and Donald Sterling just agreed to revenue sharing with small market clubs it’s less likely that the NBA will place another team in their backyard.

As for Seattle, despite their clear efforts to bring an NBA team back home, they are well behind Sacramento in their pursuit of an arena.  They too would have to approve public funds for a new building, and Stern and the Maloofs will have to weigh the $80 million cost of a sure thing given a ‘yes’ vote, and a nebulous offering in Seattle that is 1-2 years away while Key Arena is a stop-gap solution at best.

With all of the support David Stern and the NBA has given Sacramento in its fight to keep the Kings – from manpower in the front office to people on the ground helping make the arena deal a reality – it just doesn’t make sense for them to pass up a viable option for two that have problems.

This is a complex situation and it is not a done deal, but the once half-court shot turned 3-pointer doesn’t even seem like a free throw at this point – it seems like a layup.  The Party of Five that voted down a public vote that would have sent the Kings packing are interested in a deal that addresses the aforementioned criteria.  That criteria reportedly can be met and still provide the project with the money that it needs to be green-lighted, assuming the private parties each put in amounts that seem reasonable, achievable, and already written in pencil.

Kings fans will probably wait until the shovels hit the dirt before they celebrate.  Let this prediction be the first bottle of Dom Perignon.

The Kings aren’t going anywhere.

Sacramento one vote away from losing the Kings last night, but still in control of their destiny

team maloof with stern

If you build it sticky-fingered shooting guards will come.

And if Sacramento doesn’t approve an arena for the Kings quickly then Seattle has no problem playing Kevin Costner.

And let’s not bury the lede here, Seattle almost got their wish Tuesday night as the Sacramento City Council narrowly voted 5-4 to bury a resolution that would have sent the Kings packing for all intents and purposes. But let’s couch that for a second and start from the top.

Seattle mayor Mike McGinn has been working with multimillionaire Christopher Hansen to bring an NBA team back to the Emerald City, and it’s clear Hansen has been in long-term discussions with power brokers in the Seattle area and probably David Stern and the NBA. How far they are along is debatable, but this week at least some in the Seattle media have gone as far as to say that there is a “70/30” chance the Kings play in Seattle next year and that the announcement could come in April.

That sounds like wishful thinking, because there are way more questions in Seattle than there are answers, and Sacramento appears to control its own destiny when it comes to the Kings.

McGinn, who said he has met with Hansen face-to-face just once, has admitted as much in his various media appearances, refusing to give too much hope to Seattleites that the Kings could indeed be coming. “A lot of things have to align for this to work, and I can’t predict whether everything will align or not,” he said, trying to manage expectations of listeners on ESPN 710 in Seattle.

“My expectation, and this isn’t my side of the equation, that’s gotta come from the folks that are looking to own a team – I don’t think they’re moving forward unless they feel they have commitments from the NBA and the NHL, but that’s their business, and I think that’s one of the things that has to align, as well. They’ve gotta make sure that they have a pathway. My understanding is that given the way that these things work, they probably have some type of pathway but I can’t give you any information about what that looks like.”

That pathway is for the Kings arena effort to fall flat on its face. One way to help agitate the process is to leak news of the city’s very real plans to snatch the next available NBA team in the weeks leading up to Sacramento’s critical stretch run.

Sacramento mayor Kevin Johnson was unfazed in comments made to the Sacramento Bee’s Ryan Lillis.

“I don’t blame them for trying to build an arena. I just don’t think it’s going to be Sacramento,” said Johnson, in reference to which NBA team could move to Seattle. “We have a laser focus on our business at hand, we’re controlling our own destiny and that’s what we’re focusing on.”

If Seattle cannot cash in on the Kings then the next most viable option would be the league-owned Hornets, as the NBA is closer to contraction than it is to expanding anytime soon.

Sacramento has until March 1 to present a viable funding plan to the Maloof family and the NBA, or it’s widely believed that the league will allow the Maloofs to move the team. Anaheim, like Seattle, has taken a wait-and-see approach and has appeared to be elbowed out by Seattle, and one doesn’t have to think hard to figure out what Jerry Buss and Donald Sterling think about that.

The Maloofs, for their part, have appeared committed to keeping the team in Sacramento and multiple sources have indicated that they have no plans to sell the team. They also said in December that they would be willing to be flexible with the deadline if arena talks were moving in the right direction. Regardless, assuming that anything is set in stone on their end is a fool’s errand right now.

While there have been many rumors to the effect that the Maloofs are struggling financially, nobody truly knows how they’re doing. Their sale of the Palms in June could be seen as both a sign that they freed up money to operate the Kings, or a sign that the ship is sinking. And even if they were to sell the Kings, it’s not beyond the realm of possibility that the NBA could continue to work with Sacramento in coordination with another buyer, as the league has spent tremendous time and resources helping the team regain its footing in the California capitol.

Going back to the lede, Kevin Johnson and his Think Big Sacramento coalition are nearing a conclusion to the year-long fight, and they had a critical vote last night that was closer than any arena insiders, including myself, thought it would be.

Councilwoman Sandy Sheedy, the unofficial figurehead of the anti-arena effort on the council, made a motion to bring the Kings arena issue to a vote in June. Her motion would ask the public to vote up-or-down on whether or not the city should turn over its parking assets to a private operator for upward of $200 million to go toward a new arena. This, of course, is a disingenuous position knowing that the NBA’s March 1 deadline would render any June vote useless – and the prevailing belief in and around the city political scene is that she is exacting political revenge upon Johnson. As the story goes, he did not give her a seat in his inner circle after she endorsed his mayoral run. Sheedy has since drawn numerous competitors for her district seat amidst plummeting popularity, and last week announced that she would not seek re-election next cycle.

In following the commentary made by council members throughout the past few months, only two had made strong statements against using public funds for an arena, and I had handicapped the total vote to be in favor of Kings fans. What we saw last night was the most recent ‘call’ in arena poker, with one anti-arena leaning vote (Kevin McCarty) making his position clear after supporting Sheedy’s resolution, one swing vote (Jay Schenirer) swinging hard to the pro-arena side and voting against a public vote, and one arena cheerleader (Bonnie Pannell) going completely off-script with a vote to support Sheedy’s resolution.  The resolution ultimately failed by a 5-4 vote, so there will be no deal-breaking public vote and the decision to keep the Kings will be made by the council itself in the coming weeks.

Combining the new projected anti-arena votes with the old ones, there are four councilmembers that have acted to send the Kings packing, including Sheedy, Darrell Fong, McCarty, and Pannell. Arena supporters Rob Fong and Angelique Ashby join Steve Cohn and Schenirer as leaning yes votes on the eight-person panel, with mayor Johnson as the tie-breaking ‘yes’ vote.  While I suspect this is a group that votes ‘yes’ to keep the Kings in Sacramento, this situation is much too close to call with just one more defection needed to kill the deal.

They will meet on February 14 to discuss the finalized list of parking lot operators that the city will request final proposals from.  Chances are at some point KJ is going to have to get an extension on the March 1 deadline. With those parking numbers in hand, the last step is for all of the public and private funding sources to get in a room and decide finally, once and for all, what everybody is going to contribute to the estimated $400 million price-tag of the new Entertainment and Sports Complex.

Multiple sources tell me that number is going to be reached, and the pieces of the puzzle are falling into place quickly. Earlier Wednesday James Ham of Cowbell Kingdom reported that Sacramento is going to ask the NBA and the Maloofs for $80 million and his cohort Rob McAllister reported that two executive level sources with the Kings have a “strong belief” that if the “numbers are close” that the league will come up with the balance.

While things are coming into focus, for now there will be speculation, and with last night’s close city council vote the vultures will descend and you’ll find more reports trying to pry the Kings from Sacramento’s nowhere-near-dead hands.

“Stern is one of the guys who the group in Seattle is talking to, and he wants a team (in Seattle), and he’s apparently told them that they can play in Key Arena while an arena is being built,” said Steve Kelley of the Seattle Times, who also made the 70/30 comment tying a Kings-to-Seattle announcement to April.

Stern was more diplomatic when speaking to Brian Smith of the Salt Lake Tribune.

“Obviously, we certainly have been supportive of Mayor [Kevin] Johnson’s efforts with respect to the building and we sure would like to see that happen,” Stern said. “But we cannot guarantee or [assume] it, and we’ll have to deal with the realities as we find them.”

Surely the commissioner could take umbrage to Kelley’s reports that he is knee-deep in talks with Seattle, but I’m betting he lets the Emerald City flex its arms and scare the cow poop out of Kings fans and councilmembers alike.

The irony here is that Sonics fans were exactly where Kings fans were when Clay Bennett moved their team away, and the producer of the acclaimed documentary Sonicsgate: Requiem for a Dream, Jason Reid, was outspoken in supporting Kings fans last April – showing up at a Thunder playoff game ringing cowbells for all the cameras to see. But all is fair in love and sports.  When news broke about Seattle’s interest they tweeted out an old 2010 video that states, “No Team Is Safe,” and at the end shows a Seattle Kings logo. Colin White, web and graphic designer for Sonicsgate said, “It is what it is. We want (their) team.”

So, no, Stern won’t put a blanket on the bidding war at this late hour. If anything he’ll ratchet it up. The only difference here is that Kevin Johnson has the ball in the final seconds, and as long as he gets four council members to agree with him he’ll probably hit the game-winning shot.