There’s a deal on the table to kill professional basketball in Sacramento.
Anaheim city officials Friday released an unsigned lease proposal between the city and the Sacramento Kings involving owners the Maloof brothers, and Honda Center operator Henry Samueli. From SBNation.com:
The centerpiece of the agreement is an upfront $50 million loan to the Maloofs, who own the Kings franchise. The loan would actually be made by Samueli, but paid for immediately by bonds issued by the city of Anaheim. Samueli would be on the hook to repay bondholders, and the lease agreement includes a process for the Maloofs to pay Samueli back. A city staff report recommending approval of the bond issuance says that taxpayers would not be put at risk.
The bond issuance also includes $25 million for Honda Center renovations, including a practice facility and locker rooms. The Maloofs are expected to face hefty relocation fees due to encroachment on the Lakers’ and Clippers’ Los Angeles market. The Maloofs also have an outstanding $70 million loan from the city of Sacramento to pay immediately upon relocation.
The details of this arrangement make it clear that the Maloofs aren’t negotiating from a place of strength. They’re taking on further loans, not getting substantial stakes in concessions, parking, etc. and are surrendering leverage to Samueli. Which would make you wonder why this deal is so important for them until you realize how bad things must be in Sacramento financially in order to push the owners into considering this unsigned deal.
Another pivotal part of this agreement is that there’s no risk to Anaheim tax payers. The issuance of bonds to cover the expenses for renovation of the arena means that the city can more easily pass the agreement through the city council who won’t be on the hook for a tax increase. Granted, there will still be concerns from citizens considering the dire circumstances of the city’s finances, but when has that ever stopped a government body from doing something impulsive?