Future of NBA arena subsidies, market comparisons to decide Kings’ fate

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As Sacramento Mayor Kevin Johnson has been advertising for the past month, we did indeed get confirmation of the identity of his ‘whales’ at his State of the City address on Thursday.

Reiterating parts of his four-part plan that included bringing together a local ownership group, finding big equity investors (whales), putting together a downtown arena deal, and demonstrating the value of the Sacramento marketplace – Johnson would announce that 24 Hour Fitness founder Mark Mastrov and billionaire Ron Burkle would put in a bid to keep the Kings in Sacramento.

“With all due respect to Seattle, I do hope they get a team someday, but let me be perfectly crystal clear, it is not going to be this team,” said Johnson.

Johnson also announced that former Kings great Mitch Richmond would join the local ownership group and that the city’s proposal would include an option to return WNBA basketball to Sacramento.

Sources close to the situation told PBT that the framework of the offer delivered to the NBA on Friday was very close to Seattle’s $341 million offer for a controlling 65 percent interest in the club. NBA spokesman Tim Frank confirmed delivery of the offer on Friday, the day of the deadline.

Over the next month Sacramento will continue to iron out the details on a public subsidy and arena deal locally with the Sacramento City Council, which will ultimately vote on a term sheet to be delivered to the Board of Governors in time for their April 18-19 meeting.

Sources tell PBT that the Sacramento offer will be conveyed by the group to the NBA’s joint committees in charge of reviewing the situation on or around April 1. It is expected that Seattle’s group will also meet with that committee around that time, though no meeting has been publicly acknowledged.

According to sources, the two issues that will drive the conversation is the league’s strategy for securing arena subsidies in the future, and the impact each market will have on team revenues and the league’s financial model as a whole. Also under consideration are timelines to deliver an arena, ownership groups, and the precedent the league could set by blocking an owner from selling to a group of their choosing.

The league blocked a sale of the Minnesota Timberwolves to a group headed by boxing promoter Bob Arum in 1994, but a well-placed source told PBT that the league views this transaction as “unprecedented,” citing that never before has the league relocated from a city that has supported its team both at the gate and with public subsidy dollars.

The Maloof ownership group reportedly has “little to no leverage” in NBA’s decision-making process. They also reportedly owe the NBA in excess of $100 million on a line of credit they’ve used throughout their ownership. If called in, the family’s financial woes could give the league an opening to use the ‘Best Interests of the League’ clause, similar to the way Major League Baseball removed Dodgers owner Frank McCourt.

Sources do not expect the Maloof family to push back on the league’s decision to back either Sacramento or Seattle, citing the prohibitive costs of an antitrust lawsuit, and the potential for the family to lose a chance to cash out in Sacramento or Seattle.

The issue of market comparisons between Sacramento and Seattle is cloudy, but sources expect Sacramento to be competitive in that area because it has one major sports team in their No. 20 TV market, while Seattle could have six major sports teams in its No. 12 TV market. We will cover this in a bit more detail later in the next few weeks.

While details about Sacramento’s ownership group are a bit hazy at this time, it has been expected that Mastrov would be the front man. The more private Burkle reportedly would focus on the development of the Downtown Plaza location. Sources indicate the duo will share in the ownership of a potential deal, though it’s unclear what those percentages will be. Both owners have been vetted by the NBA, and Mastrov finished second in the Golden State Warriors bid that recently went to the Joe Lacob group.

While Seattle’s Chris Hansen-Steve Ballmer group has enormous wealth, another well-placed source speaking to PBT under condition of anonymity said the league is happy with both ownership groups and not to expect a deal to hinge on any comparison between them.

If a showdown comes to the owners’ deciding vote, some sources hinted at a scenario in which the league tells the Hansen group that they’re going to choose Sacramento – allowing the Hansen group to bow out gracefully and avoid a divisive ownership vote.

Should the league favor Sacramento, sources say the work the city has done to fight for its team and the narrative it will give the league to sell to future cities in arena negotiations will have played a critical role in the NBA’s decision-making process.

Seattle’s deal contains a greater percentage of private funds due to local initiative-91 requiring public funds to return a guaranteed profit, which is a trend the league wants to avoid.  On the other hand, Sacramento’s deal fits the public-private model the league is selling to cities, with a larger public subsidy going toward a new state-of-the-art building in a downtown revitalization effort.

We will cover that issue in greater detail in the coming weeks.

In order to keep their team, Sacramento will need eight votes out of 29 other owners to block the transfer of ownership to Seattle’s Hansen/Ballmer group.

DeMar DeRozan expresses anger at trade to Spurs on Instagram

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DeMar DeRozan has been loyal to Toronto.

He embraced the city when former stars abandoned it and pushed their way out of town. In 2016, as a free agent, he didn’t even meet with another team, he had no intention of leaving. He said he wanted to go down as the greatest Raptor ever. A Los Angeles kid himself — born and raised in Compton — he never pushed to go home, instead becoming incredibly active in the community off the court as well as being a four-time All-Star, two-time All-NBA player on it. He has led the greatest run of Raptors basketball in franchise history.

The Raptors were not loyal to DeRozan — they are shipping him to Texas in a trade for Kawhi Leonard that is being finalized.

DeRozan reportedly hates the move and put this up as an Instagram story.

“Be told one thing & the outcome another. Can’t trust em. Ain’t no loyalty in this game. Sell you out quick for a little bit of nothing… Soon you’ll understand… Don’t disturb…”

Leonard reportedly also is unhappy with the trade — he wanted to go home to Los Angeles. However, Lakers would not the players the Spurs wanted into a trade (Brandon Ingram, Kyle Kuzma and more), and the Clippers do not have the assets to interest the Spurs in a trade. San Antonio was holding out for other bidders, biding their time, and in came Raptors’ GM Masai Ujiri with an aggressive move.

Leonard’s inexperienced management team, which did not handle this situation well, wanted him in a major market that would boost Leonard’s marketing opportunities. While Toronto is a big market — sixth largest in the NBA, bigger than Philadelphia — and is the team of a nation with fans across Canada, this is not what Leonard’s people wanted. He is a free agent next summer in 2019.

DeRozan has every right to feel betrayed — next time you think of complaining about how players are not loyal to cities/teams/fans, remember this. Loyalty is a luxury in the NBA and one rarely rewarded.

DeRozan also will come around and embrace San Antonio, the Spurs culture, and Gregg Popovich. He will help them win a lot.

Whether the Raptors can win over Leonard becomes one of the NBA’s biggest storylines of 2018-19.

Raptors reportedly agree to trade to acquire Kawhi Leonard from Spurs

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Raptors’ GM Masai Ujiri wanted to shake things up in Toronto this offseason, to change the culture, to make a push for a ring with LeBron James having gone West. The status quo was no longer good enough.

He has done that in the most dramatic way possible.

In maybe the biggest move of the summer, the Raptors are about to acquire Kawhi Leonard from the San Antonio Spurs. From Adrian Wojnarowski and Chris Haynes of ESPN:

The Toronto Raptors are finalizing a deal to acquire San Antonio Spurs star Kawhi Leonard in a trade package that includes All-Star DeMar DeRozan, league sources told ESPN.

An agreement in principle could be reached as soon as Wednesday, league sources said.

Leonard and DeRozan are both aware that an agreement could be imminent, and neither is expressing enthusiasm for the deal, league sources said.

DeRozan seems to confirm the trade — and his displeasure with it, he wanted to go down as the greatest Raptor ever and embraced that city when others stars had bolted it — in an Instagram story.

Leonard and DeRozan cannot be traded for each other straight up (DeRozan makes $7 million more than Leonard), the deal would need to have other players and picks involved. Something such as Leonard and Danny Green for DeRozan, OG Anunoby and picks works, but the deal is likely more complex than this.

The Spurs did not want to send Leonard to the West and the Lakers, and they wanted a star player who would keep them relevant and in the playoffs as part of the deal. DeRozan does that (while the Lakers and Sixers would not throw in key pieces such as Brandon Ingram or Markelle Fultz). Paired with LaMarcus Aldridge, Dejounte Murray, and whoever else doesn’t get traded they are in the playoff mix in the middle of a brutal West. DeRozan has two seasons guaranteed at $27.7 million, with a player option for a third season after that.

Leonard is a free agent in the summer of 2019 and can then sign anywhere he wants. That has reportedly been Los Angeles, although in Las Vegas I heard rumors from sources that both the Lakers and Clippers are in play to get him.

The Raptors will have this season to win him over and get him to re-sign — just as Oklahoma City did with Paul George. Toronto is a fantastic city, it has a passionate fan base, and the team is poised to win a lot. Toronto also has more money: with the trade Toronto can offer Leonard a five-year, $190 million contract next summer, the most any other team can put on the table is a four-year, $141 million offer. Leonard, it should be noted, walked away from a $221 million offer should he have worked things out with the Spurs.

If Leonard is fully healthy — something nobody really knows for sure — the Raptors would be contenders in the East, a team that is a threat to favorite Boston as well as Philadelphia.

Blazers win 2018 NBA Las Vegas Summer League Championship vs. Lakers

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The Portland Trail Blazers are your 2018 NBA Las Vegas Summer League Champions. I want Multnomah County just to drink that in for a minute.

Tuesday night’s Final was not a close one, with the Trail Blazers in control of the game for most of the time. Portland jumped out to an early 31-19 lead, and were led by KJ McDaniels, who eventually took home the championship game’s MVP honors.

On the other side of the floor, it was Summer League MVP Josh Hart who had been ejected in the fourth quarter. Portland’s largest lead was 24 points, and it was surely a frustrating night for the young Lakers Squad.

Via Twitter:

McDaniels led the way for Portland, finishing with 17 points, seven rebounds, and one assist on 57 percent shooting from the field. The Blazers had six players in double figures, and helped shut down LA from 3-point range, forcing them to shoot just 3-of-21 from deep.

Hart scored 12 points for the Lakers, and Los Angeles had just three players in double figures. As a team, LA shot 39 percent from the field during the 18-point loss.

This Summer League playoff win doesn’t quite make up for the 2000 Western Conference Finals between these two rivals, But Blazers fans have to be happy that their team at least got a sniff of a deep playoff run.

No doubt they will be partying on SE Division tonight.

Lakers’ Josh Hart get ejected during Summer League Final (VIDEO)

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Josh Hart was the Las Vegas Summer League MVP for the Los Angeles Lakers. He scored a whopping 37 points during Monday night’s 2OT win against the Cleveland Cavaliers, but apparently it was just too much of him to finish Tuesday’s Final against the Portland Trail Blazers.

Hart didn’t agree with an official’s decision — presumably on a no-call — late in the fourth quarter, and he had some choice words for the referee as the floor changed possession. The Lakers guard already had one technical foul from earlier in the game, so his second earned him an ejection. It was his second of Summer League.

That’s not necessarily a good look for Hart, although it’s not as though Summer League has a real impact on a player’s career in the long run.

Should Hart have been upset that he did not get a foul? Probably not, seeing as how he led with his elbow. No doubt Lakers brass will be more concerned by the fact that he was ejected from not one but two Summer League games during his MVP run.

Hart will have to get his emotions under control as we head into the regular season for Los Angeles.

The Trail Blazers beat the Lakers in the Final, 91-73, with KJ McDaniels taking home the championship game MVP honors.