Kings Arena Update: Kevin Johnson working with Ron Burkle’s right hand man

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The Sacramento Kings arena saga took an interesting turn on Wednesday when it was announced that the Maloof family had given up majority ownership of the Palms Casino after a “recapitalization agreement” with their main creditors, TPG Capital and Leonard Green and Partners. The deal reduces the Maloof’s ownership from about 80 percent to 10-20 percent, but the Maloofs will continue to operate the casino.

The recapitalization agreement doesn’t come out of nowhere, however, as Bloomberg News and many Las Vegas outlets reported in January that there was a strong chance that this would happen, though the Maloofs refused to acknowledge that they would sell or that the Palms was in trouble.

Meanwhile, on Monday, Mayor Kevin Johnson announced the identities of the 70-person Here We Build committee, named after the grassroots movements created by Blake Ellington of #HereWeStay, and modified into #HereWeBuild when local radio personality Carmichael Dave created a pledge drive for the ages.

And if you’re a fan of political and financial All Star teams, you probably want to stand in line to get your briefcase autographed.

Headlining the committee as co-chairs are California Senate President pro Tempore Darrell Steinberg and California State Senator Ted Gaines, though the big heavy hitters here include the guy whose feasibility study is being used as Sacramento’s blueprint, David Taylor, and political heavyweight Darius Anderson, who presented to the NBA Board of Governors back in April when the Maloofs applied their full court press to move the Kings down to Anaheim.

As for Taylor, his ICON Venue Group is partially owned by sports facility giant Anschultz Entertainment Group (AEG), who has the money and wherewithal to quickly implement a time-sensitive, politically driven arena project, though there have been no public statements made to the effect that they are on board in an official capacity for now.

Anderson’s inclusion is the largest elephant in the room, however, since he is a close advisor to none other than billionaire Ron Burkle, who was reportedly interested in buying the Kings back in April.

It was this interest that created the most quotable moment in the saga to date, when NBA insider Sam Amick reported that Commissioner David Stern made a wise crack saying K.J. was bringing him a “used car dealer,” but upon learning that the billionaire was interested in buying the Kings he grew quiet and then said, “You’ve got Burkle?”

Burkle was recently ranked No. 347 by Forbes among the world’s richest billionaires, and he built his empire in the grocery industry, parlaying several successful deals into a massive financial empire across many industries.

When the Maloofs were confronted with news of Burkle’s interest in buying the Kings at the NBA Board of Governors meetings in April (a move they claimed to have rebuffed a month earlier), they were outwardly angry and they insisted that their team was not for sale. Stern would eventually echo those sentiments by downplaying a potential purchase by Burkle, and since then Burkle’s name has fallen out of the Kings’ news cycle.

But that doesn’t necessarily mean he has stopped flirting with professional sports. Burkle, also a part owner of the Pittsburgh Penguins, has reportedly joined up with Dodger great Steve Garvey to form a group interested in purchasing the struggling Dodgers franchise. This follows his attempts to buy the Pittsburgh Pirates and Washington Nationals, and if you go back to 1999, his failed attempt to bring football to L.A. with, wait for it, AEG’s Tom Leiweke.

Incidentally (or not), AEG attempted to lure Burkle’s Penguins from Pittsburgh to Kansas City, and after that failed, AEG would later help Kansas City pass a public-private ballot measure to build the now-thriving Sprint Center that returns the city significant revenue based solely on concerts and events.

And just when it appeared that Burkle was falling off the Kings’ radar, a May 18 report came out of Las Vegas from none other than Lifestyles of the Rich and Famous host Robin Leach, who wrote that Burkle “insists on re-entering the Las Vegas market.” After the company Burkle bought shares in, the Morgan Hotel Group (MHG), failed to turn around their struggling Hard Rock Café property – it was sold off to creditors in March, much to the chagrin of Burkle, apparently.

Afterward, Burkle upped his ownership stake in MHB to approximately 30 percent and installed his guy, Michael Gross, as CEO.

At least one investment banking group, Jeffries, believes they intend to grow the company rather than sell it. Leach, who may not appear on the outset to be the best source of financial news, has spent the last 10 years on the Las Vegas industry news beat, and goes on to write that Burkle and his Morgan Hotel Group have “been actively kicking the tires, examining facilities and asking tough questions of a hotel group (in Las Vegas) willing to sell off one of its properties.”

Wait. Didn’t the Maloofs just sell? Yes they did – to two separate private equity firms in Leonard Green and TPG Capital. TPG owns Caesars Entertainment and would theoretically take over the Palms, but Leonard Green has also been trying to buy up gambling entities while the gambling industry is bottoming out – so it’s still anybody’s guess what the end-game is over at the Palms.

Let’s be clear – Leonard Green isn’t Burkle, and Burkle isn’t Leonard Green, but maybe Burkle is Finkle and Einhorn is a man.

Leonard Green and Burkle’s investment firm, Yucaipa Companies, both bought large portions of the grocer Whole Foods in 2009. And in 1991, Burkle sold his Almac’s grocery stores to Leonard Green for $75 million. All the while, both have been extremely active investing funds for the California Public Employees Retirement System over the last two decades. Surely it’s possible that in the elite rungs of society, where the billionaires play Kevin Bacon’s Six Degrees of Separation game with themselves all the time, that any interaction between the two entities is purely coincidental.

But just to be sure, I may have to go down to the Palms this Wednesday when Burkle will reportedly be there to celebrate the NHL awards and ask him about it myself.

The Maloofs, for their part, are not publicly tipping their hand regarding the involvement of Darius Anderson. George Maloof recently told Dale Kasler (via Ryan Lillis) of the Sacramento Bee that Anderson’s involvement in the committee “doesn’t give me any thoughts or concerns.”

As for the state of the funding hunt taking place in Sacramento, the jury is still out whether the $400 million wiped off the books at the Palms will allow the Maloofs to bring more money to the table for a new Entertainment and Sports Complex (ESC), though that doesn’t mean they should have to. After all, as reported yesterday, Anaheim is going forward with improvements on the Honda Center and is welcoming the Kings with a shiny new credit card. Besides, it’s entirely possible the new financial flexibility could be funneled back into the Palms, though pumping up your newly divested asset with freed up funds doesn’t sound like ‘Plan A’ for cash-strapped NBA owners looking to fund an arena.

Regardless, the Maloofs have said that they would contribute toward funding the ESC, so this would appear on the surface to give them better flexibility in doing so.

The 70-person Here We Build committee, meanwhile, consists of every expert, partner, planner, lawyer, community leader, and politician that would be needed to complete an endeavor of such magnitude. According to a source close to the situation, the NBA has also “firmly planted their feet in Sacramento,” and has “sent their best lieutenants to work day and night to get an arena built.”

Numbers-wise, the commission has enlisted the services of at least three well-respected consultancies to review the economic impact of the undertaking, which according to well-placed sources will show enough tax revenue and job creation to not just justify the new Entertainment and Sports Center – but also give political cover to the various bodies that will need to approve the proposal.

What this means, the source says, is that the tenor of the discussion in Sacramento has changed from ‘we don’t want to pay for this’ to ‘we need to pay for this, as it may very well be the difference between economic revival and economic disaster.’ And while there will certainly be skeptics and opposition groups that may choose to latch onto the issue, they could be committing political suicide as the Here We Build committee continues to release positive economic findings.

What does it all mean? It’s hard to say anything definitive right now. But while Kevin Johnson orchestrates his regional dream team, the powerful triad of Darius Anderson, the ICON-David Taylor group, and the NBA are knee deep in the fight to keep the team in Sacramento. And whether or not AEG or Ron Burkle can come along for the ride, the amount of firepower in Sacramento right now is big news for Kings fans.

Update (Saturday, June 18, 2011): The Sacramento Bee reports that the Maloofs will own just two percent of the Palms, according to regulatory documents.  They could have the option to buy back a significant share, up to 20 percent, and in the meantime TPG and Leonard Green will each own a 49 percent of the company.

On the surface, this would strengthen the chance that the Maloofs are freeing up funds to contribute toward Sacramento’s proposed Entertainment and Sports Center.  As for TPG and Leonard Green, the fact that the pair would have matching 49 percent shares creates an interesting dynamic, whereby each company could have the same voting rights (with the Maloofs holding a tie-breaking vote).

When Charles Barkley tried to recruit Dirk Nowitzki to Auburn

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Dirk Nowitzki was not headed to an American college before the NBA. Like most of the best European players — Giannis Antetokounmpo, Luka Doncic, Pau Gasol, Tony Parker, even going back to Tony Kukoc and others — he was taking a straight trip from his European team to the NBA.

That didn’t stop Charles Barkley from trying to get him to go to Auburn.

It wasn’t meant to be, but Saad Yousuf at the Athletic tells the story of Barkley trying.

The Auburn alum reflected on his first meeting with Nowitzki, in 1997 at a Nike exhibition game in Germany, in which the Big German put on an offensive clinic against a team featuring Barkley, Pippen, Michael Jordan and other NBA talents…

Barkley called Nike and made a strong push to get to Nowitzki through any channel, legal or not. “Just tell him, anything he wants, we’ll get it done,” Barkley recalled in 2012. “Just give him anything he wants; he’s got to go to Auburn.”

Barkley didn’t stop there, though. Nowitzki left such an impression on Auburn’s greatest hoops export that Barkley even talked to Cliff Ellis, Auburn’s coach at the time, to encourage the program to make a run at this relatively unknown teenager in Europe.

Ellis notes that in 1997 he couldn’t just jump on YouTube and find clips of a player, there wasn’t much film of European players. Still, the coach was willing to go on Barkley’s word and reached out.

Turns out Kentucky, Stanford and other colleges did as well, but to no avail. Nowitzki went straight into the 1988 NBA Draft, where the Bucks took him ninth overall then executed a draft-night trade sending the big German to Dallas for Robert “Tractor” Traylor. The rest is Hall of Fame history.

For Barkley, Ellis, and Auburn fans, it’s quite the “what if.” That was a 29-4 Auburn team in 1997-98 that was an NCAA Tournament No. 1 seed led by a couple of future NBA players (Mamadou N’Diaye and Chris Porter). Add Nowitzki into that mix and… we will never know. But it could have been glorius.

 

How will, should player salaries be allocated as only some NBA teams resume?

Timberwolves star Karl-Anthony Towns and Mavericks star Luka Doncic
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The Timberwolves will play 64 games this season. The Mavericks will play 75-77 games before the traditional playoffs.

Should Dallas players get paid a higher percentage of their salaries than Minnesota players?

That’s one of the thorny questions as the NBA resumes its season.

Though players have individual contracts with defined salaries, there’s an overriding factor in determining actual wages. The Collective Bargaining Agreement calls for players and owners to split revenue approximately 50-50. Salaries are adjusted to reach that 50-50 split.

Each year, the salary cap is set to a number designed to get total player salaries to about 50% of league-wide revenue. Obviously, that’s a difficult target to hit precisely. So, there are mechanisms to adjust the distribution of money if necessary. If their total slated salaries are higher than 50% of revenue, players don’t receive their full salaries. If their total salaries are lower than 50% of revenue, players get a shortfall check from owners.

Coronavirus has disrupted that well-oiled system

The league is missing a major chunk of revenue. Players’ slated salaries would call for them to earn WAY more than 50% of revenue. That’s why the NBA has been withholding a portion of players’ salaries. Force majeure allows teams to reduce players salaries for games canceled due to an epidemic.

The NBA’s reported plan reveals the number of lost games. There were 259 regular-season games remaining when the season was suspended. The continued season includes 88 regular-season games (eight each for the 22 continuing teams) plus 0-4 play-in games.* No playoff games are being canceled.

*I’m counting play-in games as regular-season games. It’s a gray area. Perhaps, owners and players will agree to count them as postseason games. It probably doesn’t matter here, anyway. In terms of force majeure, regular-season and playoff games count equally. So, it’s simple enough to count them as regular-season games.

That’s 167-171 canceled games.

Except not every team will have the same number of games canceled.

There’s a four-game spread in the number of games each team has played so far. The Warriors, Timberwolves, Cavaliers, Pistons, Hawks, Knicks, Bulls and Hornets are done now. Every other team will play at least eight more games. The Mavericks, Grizzlies, Nets, Magic, Trail Blazers, Pelicans, Kings, Spurs, Suns and Wizards could play up to two play-in games.

Based strictly on games played, here’s how much players on each team stand to lose in salary:

  • Timberwolves: 19%
  • Hornets: 18%
  • Bulls: 18%
  • Cavaliers: 18%
  • Warriors: 18%
  • Pistons: 17%
  • Knicks: 17%
  • Hawks: 16%
  • Lakers: 12%
  • Spurs: 10%-12%
  • Celtics: 11%
  • Rockets: 11%
  • Clippers: 11%
  • Thunder: 11%
  • Raptors: 11%
  • Jazz: 11%
  • Nets: 9%-11%
  • Pelicans: 9%-11%
  • Kings: 9%-11%
  • Wizards: 9%-11%
  • Nuggets: 10%
  • Pacers: 10%
  • Heat: 10%
  • Bucks: 10%
  • 76ers: 10%
  • Grizzlies: 8%-10%
  • Magic: 8%-10%
  • Suns: 8%-10%
  • Trail Blazers: 6%-9%
  • Mavericks: 5%-8%

Is that fair to players on the eight done teams? They didn’t ask for their season to end prematurely.

On the other hand, they don’t have to do any more work. Other players must travel to Orlando, live under restrictions, play games with heightened injury concerns and risk contracting coronavirus just so the league can increase its revenue. Should eliminated players reap the rewards while sitting home?

This tension also exists in normal times. Players across 16 playoff teams divvied up just $20 million total for competing in the 2018 playoffs, and the amount was similar last year. Player income is largely earned on the regular season, even though the players playing in the playoffs disproportionately draw the revenue that funds everyone.

But the disparity feels sharper now – with the worst teams not even finishing the regular season and playoff teams facing a far larger burden just to keep playing.

To a certain degree, this is a player problem. Owners are going to pay approximately 50% of league revenue to players. The CBA dictates how players on each team should have their salaries cut through force majeure. If players want to share the losses more evenly among each other, owners should accommodate.

Consider this similar to cap smoothing, which the union infamously rejected. Except in that case, it was more just luck which players were in the favored class. Now, the players who could earn more will actually be the ones putting in the additional work. Then again, there could be a push for everyone to share the losses more equally.

Like many things disrupted by coronavirus, there are no good answers.

Report: NBA planning to start next season on Christmas

NBA Christmas
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The current NBA season – interrupted by coronavirus – could extend as late as Oct. 12. That means the league must delay next season. How long past the normal mid-October start? December was the popular notion, but that’s still a wide timeframe.

Now, we can pinpoint it.

Marc Stein of The New York Times:

If the N.B.A. can successfully complete the 2019-20 season under this structure, it is expected that the 2020 N.B.A. draft would be moved to October, with free agency to follow shortly thereafter and a tentative plan to establish Dec. 25 as opening day for the 2020-21 season.

Coronavirus can ruin the best-laid plans. Though NBA commissioner Adam Silver has said play would continue around a positive test, it’s unclear whether that would delay this season’s schedule – then the offseason then next season. It’s also unknown how the country will be handling coronavirus in December. The cold weather, pushing people indoors, could increase cases.

But it’s still interesting to know the plan, even if it’s tentative.

People fondly recall the NBA season starting on Christmas in 2011. Many have pointed to Atlanta Hawks CEO Steve Koonin’s idea of permanently opening in December to avoid overlap with the NFL, though he suggested mid-December – not Christmas.

That’s quite late.

This year, coronavirus has forced radical changes. A Christmas start might be totally reasonable for the 2020-21 season.

What about beyond?

If the NBA wants to begin each season on Christmas, this is the simplest time to shift. A different start date for future seasons would require altering the calendar to get on track.

There are plenty of issues with opening on Christmas in normal times, though:

  • Historically, TV viewership is down during the summer. That might be changing, but people might find other activities while it’s warm rather than attending or watching an indoor NBA game.
  • Would people really watch more NBA games just because fewer of them would compete with the highly popular NFL? The NBA regular season might just be too long to capture attention, no matter when it’s held.
  • By starting on Christmas, the NBA would reduce two marquee regular-season dates – opening day and Christmas – to one.
  • Many regional TV networks that carry NBA games also carry MLB games. Many of those networks already carry NHL games. But with baseball teams playing more games, there would be more conflicts.
  • With schools out, the American system is built on summer being more of a vacation time. People within the league – including players, especially those with children – might object to working during that time.

Projecting schedules for all 22 returning NBA teams

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The NBA will recall 22 teams to each play eight games.

How will the schedule work?

The new structure will reportedly be based on teams’ existing schedules, teams playing their next eight originally scheduled games against the continuing 22 teams. Of course, that doesn’t work cleanly. Some teams would reach eight games more quickly than other teams. So, whenever a team arrived at an opponent that already reached eight games, I just continued to that team’s next game.

With that assumption, here are the remaining opponents for each team:

  • Boston Celtics: Bucks, Wizards, Raptors, Nets, Wizards, Trail Blazers, Grizzlies, Heat
  • Brooklyn Nets: Clippers, Kings, Wizards, Celtics, Magic, Clippers, Magic, Trail Blazers
  • Dallas Mavericks: Suns, Clippers, Kings, Trail Blazers, Suns, Rockets, Jazz, Bucks
  • Denver Nuggets: Spurs, Lakers, Clippers, Thunder, Raptors, Heat, Spurs, Thunder
  • Houston Rockets: Lakers, Trail Blazers, Kings, Bucks, Mavericks, Pacers, 76ers, Raptors
  • Indiana Pacers: 76ers, Heat, Suns, Magic, Rockets, Kings, Clippers, Lakers
  • L.A. Clippers: Nets, Pelicans, Mavericks, Nuggets, Suns, Nets, Pacers, Thunder
  • Los Angeles Lakers: Rockets, Nuggets, Jazz, Jazz, Raptors, Pacers, Trail Blazers,* Heat or Magic*
  • Memphis Grizzlies: Trail Blazers, Jazz, Spurs, Thunder, Bucks, Pelicans, Pelicans, Celtics
  • Miami Heat: Bucks, Pacers, Thunder, Nuggets, Suns, Celtics, Raptors, Lakers or Trail Blazers*
  • Milwaukee Bucks: Celtics, Heat, Grizzlies, Wizards, Rockets, Wizards, Mavericks, Raptors
  • New Orleans Pelicans: Kings, Jazz, Clippers, Spurs, Grizzlies, Kings, Grizzlies, Magic
  • Oklahoma City Thunder: Jazz, Wizards, Grizzlies, Nuggets, Heat, Nuggets, Suns, Clippers
  • Orlando Magic: Pacers, Kings, Nets, Nets, Pelicans, 76ers, Raptors, Lakers or Trail Blazers*
  • Philadelphia 76ers: Pacers, Wizards, Raptors, Trail Blazers, Suns, Rockets, Magic, Spurs
  • Phoenix Suns: Mavericks, Pacers, Clippers, Mavericks, 76ers, Wizards, Heat, Thunder
  • Portland Trail Blazers: Grizzlies, Rockets, Mavericks, 76ers, Celtics, Nets, Lakers,* Heat or Magic*
  • Sacramento Kings: Pelicans, Nets, Mavericks, Rockets, Magic, Pelicans, Pacers, Spurs
  • San Antonio Spurs: Nuggets, Grizzlies, Pelicans, Jazz, Jazz, Nuggets, Kings, 76ers
  • Toronto Raptors: 76ers, Celtics, Nuggets, Lakers, Bucks, Rockets, Heat, Magic
  • Utah Jazz: Thunder, Pelicans, Grizzlies, Lakers, Lakers, Spurs, Spurs, Mavericks
  • Washington Wizards: Celtics, Thunder, 76ers, Nets, Bucks, Celtics, Suns, Bucks

*To reach eight games for each team, I had to create three games not on the schedule:

  • Lakers vs. Trail Blazers
  • Lakers vs. Heat or Magic
  • Trail Blazers vs. Heat or Magic

Los Angeles would face whichever of Miami and Orlando that Portland doesn’t face (and vice versa).

The Lakers could also play the Trail Blazers twice, and the Heat could just play the Magic. But that’d mean five Lakers-Trail Blazers games and five Heat-Magic games this season. Generally, teams play each other four or fewer times.

I wouldn’t get too caught up in the order of the games. That almost certainly must be adjusted. Otherwise, teams would finish at significantly different times. For example, the Bucks’ eighth game in this format is against the Raptors. But that’s just Toronto’s fifth game.

The NBA might also use a different method altogether. Again, the reported plan can’t work exactly as reported.

But want the best guess at each team’s remaining games? This is it.

*Thanks to Kevin Pelton of ESPN for providing a handy spreadsheet of originally scheduled games.