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How Ironic

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Tomorrow night the Kings play the Thunder.

I would guess that many Kings fans will feel about the Thunder the way we always felt about the New Orleans Hornets.  That somehow this other franchise had tremendous impact on our own situation despite the fact that the two cities never really interacted.  This all would have been resolved if the Hornets had remained in Oklahoma City.  Instead they are a terribly performing franchise about to be renamed in a way that will serve only to make them more provincial and completely minimize their global identity.  They stayed there, OKC took our Sonics and we take the Kings. Musical chairs is a really fickle game.

I am not certain if people understand this concept of the $30M and litigation clearly enough.  Please note that I have not spoken to anyone on the Hansen team in any way about the contract but can only speak from my own personal experience in 2007 and 2008.  There is little chance that Hansen would ever sue the NBA.  He could however sue the city of Sacramento or the owners it assembles.  Both the city and those potential owners need to be aware of the liability they may be incurring if they cross boundaries.  It is one thing to try to assemble your own deal.  It is another to maliciously try to interfere with somebody else's deal with the deliberate intent of forcing a breach of contract.

On an individual level this liability will vary depending on the person's position.  If these people have shareholders then they need to consider their fiduciary responsibility to their shareholders or primary business.  As an example it would have been very poor for the CEO of Microsoft to have been publicly sued for dishonest business practices in a private matter as that could have resulted in diminished confidence and reduced share values.

From a city standpoint they just have to look at the money and compare it realistically to their odds of winning.  If this transaction goes through the city will receive a $77M payoff of the franchise loan.  If it fails they face paying a minimum of $30M in damages if it is found that they interfered in a contract to which they were not a party.  Thats a $107M swing in the general fund this year for a city that announced it is closing 12 schools and all of its public swimming pools.

Yesterday's press conference was not encouraging for Sacramento.  Something clearly went wrong there.

The NBA does not want 30 different minority owners.  They are not setting this thing up for success.  The situation as we currently understand it is this:  2 major investors are interested in ownership but beginning financial review and due diligence to see whether they are willing to come forward and be publicly named.  They of course have to figure out the price they are willing to pay and the terms they will consider.  They also have a very limited window to figure out their own working relationship and personal liabilities.

The formerly approved arena concept now appears to be clouded with a new downtown arena site being selected. That site has a preliminary feasibility study but no significant review.  The former arena site has more significant review but revenues and contracts have not been confirmed and architectural drawings are not nearly completed to the level they are in Seattle.

Those owners must now negotiate minority ownership stakes with as many as 30 individual shareholders that the mayor has assembled.

I hate to be so cynical.  We will see what next week brings them.