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.

Report: Cavaliers, Larry Nance Jr. talking contract extension

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When the Cavaliers made the trade deadline deal with the Lakers last February, they got Larry Nance Jr. (the son of a Cavs legend) and Jordan Clarkson (surrendering Channing Frye, Isaiah Thomas and a 2018 1st round draft pick that became Moritz Wagner).

Nance is the one the Cavaliers seem intent on keeping, and they may extend him, reports Tom Withers of the Associated Press.

This seems like a good fit for both sides, if they can find a number that works. The Cavaliers are committed to not bottoming out right now — which is why Kevin Love got a new massive contract — and Nance fits with that.

This is not going to be a max contract, but Nance has made it clear he likes playing in Cleveland and wants to stay. After he came over last season he averaged 8.9 points on 55 percent shooting, 7 rebounds, 1.4 assists, and 1.4 steals a game. Those numbers could go up with LeBron James no longer in the picture.

LeBron James on earning Lakers’ fans loyalty: ‘I signed a four-year deal’

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Living in Los Angeles, with most of my friends Lakers’ fans, I can tell you that the majority of the city is excited and on board with the LeBron James era. They get that he’s right, the Lakers are not yet on the Warriors’ level, but they like the idea of the game’s best player with the Lakers’ young core, and the potential of that with another star player in the next 10 months or so. They are excited.

Most Lakers fans that is. There is a segment, best described as the “Kobe Bryant could walk on water” crowd, who are not sold on LeBron as a Laker. Who see him somehow as a threat to their Kobe worship. They question LeBron as a “real Laker” and his loyalty.

That took all of two days of training camp to come up, and for LeBron to shoot it down. Via Ben Golliver of Sports Illustrated.

LeBron nailed this. He has signed on and trusted Magic Johnson and Rob Pelinka more than he had anyone since Pat Riley — LeBron never signed long-term deals in Cleveland and trusted Dan Gilbert. He trusts Magic and Jeanie Buss. That is huge.

LeBron’s Laker era is ultimately going to be judged by winning a title, because all Lakers’ eras are judged that way. Kobe would talk about nothing else. LeBron understands that reality. But the era of being able to buy an NBA title is gone — the Lakers have free agency advantages few other franchises do (thanks to the location and the brand) but that is not enough. The biggest question for the Lakers is not can they land another star before next season, but rather can the core of Brandon Ingram, Lonzo Ball, Kyle Kuzma and the rest be the guys that stand with LeBron? If at the end of games this season it is LeBron sharing the court with Rajon Rondo, Lance Stephenson, and Michael Beasley, the Lakers have much bigger problems than who is the next star they sign.

LeBron is all in. He can help cement his legacy with a title in Lakers’ Forum Blue and Gold, but he knows he needs help. And he’s willing to wait for them to get it. At age 33, what else can you ask of the man?

Kevin Durant says he is taking free agency ‘year by year’

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Talk to sources around the league about the Warriors and they think Kevin Durant — not Klay Thompson, who is also a free agent next summer, or Draymond Green in the summer of 2020 — will be the first to leave the team. It may not be this summer, especially if they three-peat, but he was last in and will be first out.

Durant, for his part, is not playing the speculation game.

When asked about it, Durant was vague, reports the USA Today’s Erik Garcia Gundersen.

“Just one of those things where you’re confident in your skills and taking it year by year. And keeping my options open was the best thing for me. I could have easily signed a long-term deal but I just wanted to take it season by season and see where it takes me. And I think this year is going to be a fun, exciting year for us all. I’m looking forward to just focusing on that and we’ll see what happens after the year.”

Golden State owner Joseph Lacob admitted he would have given Durant whatever deal he and his agents wanted. They chose the short-term option, keeping a lot of doors open.

The conventional wisdom around the league is that this summer Durant will opt-out this summer then sign a five-year contract. Probably with the Warriors, but the door is open, and there are a lot of teams with max salary slots. Maybe Durant is ready to have his own team again and move on. Maybe he is happy where he is.

Durant doesn’t know the answer to that question, yet. Nobody does. But that has other teams ready to pounce, just in case one of the world’s top two players decides it’s time to move on.

What if the Timberwolves don’t trade Jimmy Butler?

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I expect the Timberwolves to trade Jimmy Butler soon. Most people expect the Timberwolves to trade Jimmy Butler soon.

But they’ve thrown enough uncertainty into the process that nothing should be taken for granted. Tom Thibodeau said he expects Butler to report to training camp if not traded within a week, and as of yesterday, the president-coach was reportedly still trying to convince Butler to stay in Minnesota.

What happens if the Timberwolves don’t trade Butler and he refuses to report?

If he withholds playing services for 30 days after training camp begins, he won’t accrue a year of service and can’t become a free agent next offseason. He couldn’t sign with another professional basketball team unless Minnesota agreed.

That 30-day clock seemingly isn’t ticking, as Butler is excused while recovering from offseason hand surgery. But if the Timberwolves want to get serious about keeping Butler, they could press the issue.

But Butler would have options, too. He could – a la Mo Williams with the Cavaliers – undergo surgery and claim he’s not healthy enough to report. Players, especially ones as damaged as Butler, often have medical issues to clean up. That could mean embellishing the effect of the hand surgery or undergoing a new surgery altogether. An elective surgery could legitimately sideline Butler. Claiming Butler is actually healthy enough to report when he says he isn’t could get quite messy if the team objects.

Again, I don’t expect it to get that far. I doubt the Timberwolves, particularly owner Glen Taylor, desire to hold Butler hostage like that. Even if they do, Butler could just report and play. He can become an unrestricted free agent after the season and leave then.

But these are the extreme options on the table if this situation devolves further.