In depth: Stern fires shot across the bow at the Maloofs, who continue to threaten the NBA’s billion dollar arena subsidy

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A meticulous planner, everything David Stern says is run through a filter of lawyerly instinct and an ever-present awareness of his surroundings.

So when David Aldridge asked him if the NBA would support the Maloofs in their desire to move the Sacramento Kings to Anaheim on Tuesday – don’t think for a second that he hadn’t weighed the legal gravity of the situation or the wishes of his 29 other bosses.

“If there was a vote now, there would be no support for a move,” Stern said.

Stern then went on to poke at the Maloofs for their current plan, which includes staying in the nearly dilapidated Power Balance Pavilion for at least one more season, despite the family threatening to leave town for years because the building is dilapidated.

“That’s their prerogative. As long as it (Power Balance) stands and passes the fire code, I think it’s been a terrific place for the fans of Sacramento,” said Stern in his typical dry wit.

This is the most recent play on the NBA’s relocation chess board, and with the Maloofs overtly implying an antitrust lawsuit against the league for well over a year now, it’s a telling one.

Antitrust suits have been the weapon of choice for owners looking to find greener pastures, and though case law provides limited guidance for courts, it has generally been a favorable area of law for relocation efforts.

On the other side of the coin lies the ‘best interest of the league’ clause found in most sports associations’ bylaws, including the NBA’s. The bylaws allow for the commissioner to take any action they deem necessary to protect the league, and the league’s preferred association status is tied to the commissioner’s ability to show that ‘due process’ has been provided during disputes amongst owners.

The best way to understand this is to know that the courts generally aren’t going to restrain the trade of an NBA owner. They’re also not going to allow an owner unilateral ability to destroy the league that it operates within as a single entity, and the tipping point is somewhere in the middle. The leagues and courts have already found mechanisms (relocation fees) that allow the individual entities impacted by a move to be indemnified to a certain degree.

In the case of the Maloofs’ attempted move to Anaheim, sources with knowledge of the situation have reported that a relocation fee would be upwards of $300 million.

In this case, there are two injured parties in L.A. that would disapprove of the Maloofs’ desire to move into their market, but the more pressing issue for all of the NBA’s owners is what the Maloofs are doing to impact the integrity of the league’s billion dollar arena subsidy.

Since 1990, the NBA and its players have enjoyed a $3 billion public subsidy toward arena costs.

In April, the family backed out of a deal that as anchor tenants required them to pay $73 million toward a $391 million facility – $67 million of which would be provided by the NBA in the form of a loan. George Maloof called it a “good deal,” Gavin Maloof cried tears of joy after the parties emerged from an Orlando hotel room heralding the deal during All Star Weekend, and both Gavin and brother Joe held Sacramento mayor Kevin Johnson’s hands in triumph at the Kings’ next home game.

All of it was a ruse, though. It became clear that the Maloofs had no intention of striking a long-term deal with Sacramento when political crisis consultant Eric Rose was brought on by the family to handle its media strategy, and their antitrust attorneys began sending threat letters to the city that were designed to disrupt its ability to deliver on a tight timeline. Then came the ridiculous requests and demands, and the confidential communications between the family and the NBA eventually were leaked to a Sacramento website that opposed the arena deal.

Eventually, the Maloofs would burn most of their bridges in Sacramento in what Stern would describe later that day as “not the weirdest press conference we’ve ever had.” They hired an economist that twisted enough facts for Stern to say he acted in “ill grace,” and their antitrust attorneys pitched against Sacramento over PowerPoint. With only the Sacramento media allowed in their New York hotel conference room, George Maloof went on a wild tirade that made their economist Chris Thornberg look like a beacon of truth.

The NBA, who was authorized by the Maloofs to represent them in negotiations, thought the deal was fair, but the Maloofs expected to pay nothing and control all of the revenue streams in Sacramento. They expected this because of Anaheim’s long-standing offer to bring the Kings down south. Billionaire Henry Samueli and Anaheim’s city council’s offer to provide cash relief to the family would theoretically allow them to continue operating the team while making big market TV money, with the fallback position of selling the team for more than they could in Sacramento due to the larger market.

But that didn’t account for the minimum $300 relocation fee that the Maloofs or any subsequent owners would have to pay to infringe upon the Lakers and Clippers’ markets, making the deal untenable for the Maloofs if they wanted to keep the team. If their plan was to sell to Samueli or another Anaheim group, the relocation fee would certainly be a big nut for the new owners to take on in addition to the price of the franchise, not to mention a huge deterrent if the new owner senses they’re not wanted by the league.

It has been theorized that this relocation fee was communicated at some point to the Maloofs, who expected to leverage (or take) Anaheim’s offer despite being near the finish line with Sacramento. In that theory, once the Maloofs realized a move to Anaheim was not in the cards they decided to officially muck up a Sacramento deal that reflected their meager contributions, while testing their leverage with antitrust threats.

Regardless of the Maloofs’ intentions, cities that negotiate with the NBA and team owners over arena subsidies will now point to the family’s apparent bad faith dealings. Now, the league will have to explain to its civic partners how and why they should expend political capital and public funds if owners are going to use the scorched earth strategy when they don’t get what they want.

Sacramento spent significant sums of money and staff time in the arena negotiations process during a budgetary crisis only to find they were spinning their wheels – all while offering to pay for 65 percent of the arena’s costs – and the NBA is going to have to wear that issue unless they make it right by keeping a team there under a workable plan.

The timing couldn’t be worse for the league, either, with the Oklahoma City Thunder in the Finals just four years after Stern, former Sonics owner Howard Schultz, and now Thunder owner Clay Bennett stole 41 years of Sonics history from Seattle because the local government wouldn’t pony up. The government there certainly shoulders some of the blame for how that went down, but as the documentary Sonicsgate so handily points out – the principals on the NBA’s side had agendas that aren’t exactly ringing endorsements for the league.

Even if the league somehow makes things right in Sacramento and Seattle, this pulling back of the curtain could shave millions, if not billions of dollars off the NBA’s bottom line if not handled correctly by the owners. Municipalities are going to have a harder time convincing voters to part with tax money as the subsidy shakedown gets exposed, and arena funding campaigns will be forced to seek lower funding amounts as local voters lose their appetite for unsavory business tactics.

Whether it’s in the best interest of the league’s balance sheet, or the best interest of the league’s PR efforts, the Maloofs are killing the association on both fronts.

With Sonicsgate discussion now creeping into the national discourse during the Finals, we saw the first signs on Tuesday that the owners aren’t going to let the Maloofs throw the baby out with the bathwater. By stating publicly that the Maloofs have “no support” for a move to Anaheim, the league has all-but invited the Maloofs to pursue their antitrust suit.

Namely, a decision to not once, but twice inform the family that they cannot move could spawn any number of antitrust damages. If monies or opportunities are lost as the result of the league’s decision to block relocation last year, or if Stern’s public statement this year causes any damages – it adds a yet another critical piece of evidence the family could use when piled on top of the rest of the evidence they’ve been compiling.

This is a decision that does not come lightly, because neither the league nor its owners truly want to face the time and expense of a massive lawsuit like that, nor do they attack their own knowing they will one day be on the other end of the subsidy discussion themselves. At a higher level, the league does not want to see any more case law put onto record that would either weaken its ability to police itself or the various antitrust protections it enjoys. At the top of that list is the ability for the NBA and other sports associations to leverage its limited, monopolistic demand (teams) against cities in the gathering of public subsidy dollars.

Perhaps the league is aware of a solid offer from Seattle billionaire Chris Hansen that nobody out of Sacramento is willing to match, and that is the source of their confidence in saying the Maloofs would have “no support” in moving to Anaheim. Seattle mayor Mike McGinn met with Stern in New York on Monday and Hansen is ready to take on most of the cost of building an NBA-ready arena, assuming of course he can buy a team. That Stern didn’t mention the city in his response to Aldridge is a huge footnote.

Hansen could conceivably justify a higher purchase price than a Sacramento buyer given his land holdings around the proposed Sodo arena site, and the fact Seattle is about 30 percent larger than Sacramento in terms of its TV market. But those advantages are somewhat mitigated by the fact that a Seattle team would have to compete with both the Seahawks and Mariners for local revenues, whereas the Kings are the only show in town in Sacramento.

That said, saying the league decided to open itself up to antitrust exposure because of a bona fide offer it knows about from Seattle assumes a lot – including Seattle’s ability to deliver on an arena while they face local opposition of their own. It’s way more likely that the league has weighed the Maloofs’ ability to impact the league now and into the future, and it has decided that it’s in their best interests to call the family’s bluff.

If the family still cannot afford to spend money on free agents, and they will be losing significant revenue after spending the last few years biting the hands that feed them in Sacramento – Tuesday’s comments suggest the league has determined that the Maloofs cannot afford to play the antitrust card.

As is the case in most legal disputes, the winner isn’t determined by a judge or jury verdict, but which side has the largest stones and deepest pockets. The Maloofs have a large holding in Wells Fargo which many sources say is untouchable, and outside of that they have a fledgling entertainment business and a partnership to sell (OMG!) cell phone cases.

If we’re buying what the NBA sold us last summer, owning a team isn’t a huge money making endeavor. In reality, it’s a complex issue magnified by being in a small market. And unless you have a way to maximize what a basketball franchise can do, there are plenty of ways to make more from the investment it takes to play in the billionaires’ playpen.

To truly justify owning an NBA basketball team, one has to maximize their various holdings through cross promotion, invest in the areas around the arena, and maximize tax breaks before selling at an appreciated gain one day. To do this it takes a minimum level of free agent spending to field a team that will generate revenues to make that work.

The Maloofs don’t have the money to be that type of owner, at least anymore.

The Maloofs once had designs on maximizing the values of their holdings in the Palms and their entertainment empire, but the entertainment empire never panned out and the Palms is no longer theirs. Sacramento gave the family some proximity to help with the promotion of both entities, but now that bridges have been burned there, the only other destination that would supplement what is left of their non-NBA holdings was just rejected during Stern’s press conference.

Elsewhere, Seattle billionaire Chris Hansen isn’t going to build an arena so ‘the boys’ can play around in it, and even if the other cities that have expressed interest in the NBA can offer a sweetheart deal to them, they can’t significantly change the Maloofs’ cash-strapped outlook.

The only plan that makes any financial sense is for them to sell the team to the highest bidder, and with billionaire Robert Pera reportedly paying approximately $350 million for the Grizzlies to keep the team in Memphis and Tom Benson paying $338 million for the Hornets, it’s possible the Maloofs can top the $400 million mark on their way out the door.

Sacramento’s TV market is double the size of both Memphis and New Orleans, and it’s certainly plausible that Pera made an offer to the Maloofs given his Northern California roots. That Pera wasn’t able to buy the team from the Maloofs (or didn’t try) could speak to any number of issues, but finding a price point that would entice the Maloofs to sell is the NBA’s best bet at ridding themselves of their billion dollar subsidy problem.

A $400 million sale would provide $172 million for the Maloofs’ 43 percent stake, and with at least $150 million owed to the city of Sacramento and the NBA, every dollar is going to count if the family is seeking a debt-free break.

By chopping off the Anaheim leg of the Maloofs’ leverage play, the NBA is one Space Needle market away from stealing away all of the family’s leverage in a potential sale. Franchise prices in Vancouver, Columbus, Louisville, or Kansas City aren’t going to top what multiple Sacramento buyers are willing to pay, and with Seattle closing in on a viable offer it will soon be time for those buyers to put their last, best offers in, as well.

Stern loves the Sacramento market, the 20th largest market in the country and one that is devoid of competition from other sports leagues. He goes out of his way to praise the city at every opportunity for the job they did getting an arena deal done. But he’ll have a hard time forcing the Maloofs to take a substantially smaller offer to stay in California’s capitol.

It’s a nasty game of relocation chess right now. Milwaukee is next up on the clock with a year-to-year lease, an aging arena, and an aging owner. The NBA will be right back at it demanding a public subsidy, assuming of course they don’t let the Maloofs cook the goose that lays the billion dollar eggs.

As for the Maloofs, they have yet to respond to Stern’s ‘call,’ and it remains to be seen if they continue their bluff all the way down the river.

Lakers headed to second straight Summer League title game

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LAS VEGAS (AP) — Josh Hart scored 37 points and grabbed nine rebounds to lead the Los Angeles Lakers to a 112-109 double-overtime victory over the Cleveland Cavaliers on Monday in the semifinals of the NBA Summer League.

Los Angeles advanced to the championship game for a second straight year after winning the 2017 title behind game MVP Kyle Kuzma and league MVP Lonzo Ball.

The Lakers will play Portland, which knocked off Memphis in the other semi-final.

Xavier Rathan-Mayes made the play of the game when he snatched a loose ball and fed Jeff Ayres with a pretty touch pass under the basket with 45 seconds left in the second overtime. Rathan-Mayes followed Ayres’ lay-in with a slashing lay-up to put the Lakers up 110-106 with 22 seconds left.

Cleveland’s Billy Preston missed a 3-pointer at the buzzer.

Svi Mykhailiuk scored 31 points for the Lakers (6-0), while Ayres added 20.

Collin Sexton led the Cavaliers with 27 points, while Jamel Artis and John Holland each scored 17.

Trailing 105-102 in the first overtime after Sexton made a short jumper, Rathan-Mayes buried a 3-pointer to tie the score. Hart made it 106-105 by hitting the second of two free throws with 5.7 seconds remaining. Sexton did the same at the other end, splitting two free throws and tying it at 106 with 3.3 seconds left.

The Cavaliers (5-2) erased an early 11-point deficit and tied the score at 95, when Vladimir Brodziansky buried a 3-pointer with 2:00 left in regulation.

After Mykhailiuk made one of two free throws to give the Lakers a 96-95 lead with a little more than a minute left, Hart grabbed a defensive rebound and at the other end dished to Mykhailiuk, who hit a running jumper just above the free throw line to push the lead to 98-95.

But Sexton answered with a 3-pointer to tie the score with 26 seconds left. Hart missed a 3-pointer with 3.0 seconds left, and Sexton missed one from long range at the buzzer.

The Lakers went on an 18-2 run to take a 28-17 lead led by Mykhailiuk, who was 4-for-4 from long-range in the first quarter. Los Angeles shot 50 percent (9 of 18) in the opening period and was 5 for 9 (55 percent) from beyond the 3-point line.

Hart took over in the second quarter, scoring 10 of his 14 first-half points to help the Lakers take a 50-47 lead at halftime.

USA Basketball to host World Cup qualifier vs. Uruguay on Sept. 14 in Las Vegas

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COLORADO SPRINGS, Colorado (AP) — USA Basketball’s quest to qualify for next year’s FIBA World Cup will resume Sept. 14 in Las Vegas, where the Americans will face Uruguay.

That will be the first U.S. game in the second qualifying round for next year’s world championships in China.

Like the first round, the U.S. will continue being coached by Jeff Van Gundy and will have a roster made up primarily of G League players. The Americans went 5-1 in the first round.

The U.S. and Uruguay are among 12 teams from the Americas zone vying for seven World Cup spots. The others are Argentina, Panama, Puerto Rico, Mexico, Venezuela, Brazil, Chile, Canada, the Dominican Republic and the U.S. Virgin Islands. The United States is a heavy favorite to qualify, then will send NBA players to China for the World Championships (there is a workout for some of those players coming up in Las Vegas in a week).

Second-round qualifying ends in late February. The World Cup begins in August 2019.

Mavericks sign second-round pick Jalen Brunson to first-rounder style contract

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Dallas is excited about the potential of Jalen Brunson.

The point guard who led Villanova to a national championship last April fell to the 33rd pick in the draft last June, high in the second round, and Dallas traded up a spot to get him from Atlanta. The Mavericks were ecstatic, and to the surprise of nobody they have reached terms on a contract with him.

What is a bit of a surprise is the Mavericks gave him a first-rounder style contract — four years with some guaranteed money for the first three of them — reports Shams Charania of The Vertical at Yahoo Sports.

At Summer League in Las Vegas Brunson showed the qualities that Dallas liked in him — he’s a high IQ player with polish, and he’s a pass-first floor general — but his weaknesses were also exposed. He has to shoot better (23 percent in Summer League) and his defense needs to improve.

Both of those can happen, Summer League is more of a chance for teams to benchmark players than make decisions about them. Brunson reportedly has a great work ethic, he can figure the NBA game out.

Dallas is betting that he will.

Kemba Walker: “As far as seeing me in New York, I doubt it”

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Kemba Walker is an All-Star level point guard who is heading into a contract season — he is a free agent in 2019. Walker is also a New York native, born in the Bronx he attended Rice High School in Harlem.

Combine all that with the fact both the Knicks and Nets will have enough cap space for a max (or more than one max) contract next summer, and you’ve got yourself a rumor.

One Walker shot down talking to Michael Scotto of The Athletic.

“As far as seeing me in New York, I doubt it,” Walker replied. “I’m a Hornet, and I’m planning on being a Hornet for a long time, so, yeah, I’m not sure about that (New York).”

Walker has said many times he wants to stay in Charlotte (providing they pay the market rate and are trying to compete).

That said, this is the NBA, so never say never.

A lot of NBA teams have been poised, waiting to see if new Hornets’ GM Mitch Kupchak — with the approval of Michael Jordan — decided to go full rebuild and trade Walker this summer. He has not, talking only about keeping this squad together. The Hornets are a solid team with Walker and Nicolas Batum leading the way, one that could make the playoffs in the East if things break right for new coach James Borrego. However, they will not be anywhere near contenders and if things don’t fall their way they may well miss the playoffs next season. Again. The Hornets also are not a bad team, meaning they are not going to get a high pick (without some lottery luck). They are stuck in the NBA’s middle ground, a place most GMs want to avoid.

Trading Walker could jump-start the rebuild in Charlotte, but the Hornets don’t seem to be going that direction. Yet. This summer they signed Tony Parker, Malik Monk looked good in Summer League, and they got Dwight Howard out of the locker room. They say they are a team poised to make a playoff push.

If that push falls apart early in Charlotte, watch and see if their plans change. And what that could mean for Walker. And the Knicks.

However, as of now, Walker wants to remain a Hornet, and they want to keep him. Which crowds New York out of the picture.