I think today’s Sac Bee story has a pretty good summary of the Kings sale status.
The short answer is: there are two or three potential competing bidders, the bird in the hand is the Hansen offer of a reported $525 million dollars, and the others are developing Sacramento local deals.
Both deals would, sooner or later, pay off the debt to the city of Sacramento, that’s why I’m seeing a different initial purchase offer. Sooner or later that debt gets paid. The Hansen group is, apparently, prepared to pay that off now.
I snipped a big chunk out of the story below and inserted my opinion throughout.
Buyers surface to keep Kings in Sacramento
Bay Area investor Mark Mastrov, the founder of the 24 Hour Fitness chain, told The Bee he has assembled a group to buy the Kings and “work with the city to get an arena deal if possible.”Mastrov was a finalist two years ago in the bidding for the Golden State Warriors, with his reported offer of $350 million falling short. The team ultimately was sold for an NBA-record $450 million, which Mastrov said he “could not see clear” to match.
The value of the property in a given market has something to do with its value, (shorter) location, location, location. If $450 million in the Bay Area doesn’t pencil out then how does it in Sacramento? Maybe it does, maybe it doesn’t, but I would think that if it did then the Maloofs would be able to borrow a couple hundred million dollars and build their own arena AND make money.
It pencils out for Hansen in Seattle.
He added that he has “been in touch with the Maloofs” about a possible purchase.
The Maloofs did not acknowledge receiving overtures from Mastrov. Eric Rose, the family’s spokesman, said the family wouldn’t comment on “rumors or speculation.”
Mayor Kevin Johnson told USA Today late Friday that he’s trying to round up a bid of at least $425 million. He said such a bid would be competitive with whatever the Maloofs could get from Seattle because of relocation costs. He said he believes Sacramento has a real shot at keeping the team.
Grasping at straws, can’t blame him, and never will blame KJ.
Also expressing interest in playing some role was Dale Carlsen of Sleep Train Mattress Centers Inc., whose company is the naming sponsor of the Kings’ arena in North Natomas.
Carlsen said he has talked with other potential investors as well as Johnson.
“My hope is we’re given an opportunity as a community to put our offer in,” Carlsen said. “There’s several groups that are trying to put that together.”
People have been trying to put this together in Seattle for a few years. It’s just not something you just do. It’s not a flash mob of billionaire basketball fans.
Hey, let’s meetup at Dick’s on 45th, eat some burgers and interpretive dance in the parking lot our purchase of a basketball franchise.
Yet another potential bidder is Ron Burkle, the billionaire supermarket tycoon whom Johnson first secured as an interested buyer when the Kings threatened to leave for Anaheim in 2011.
Johnson said this week he still considers Burkle a contender, and NBA Commissioner David Stern said Thursday it would be reasonable to give Burkle a chance to match any offer by the Seattle interests.
He was looking for a discount on the purchase of the franchise. Not surprising anyone, that failed.
A new report Friday by a Comcast Sports analyst said the Maloofs had a handshake agreement to sell the team for $525 million to hedge-fund manager Chris Hansen and Microsoft executive Steve Ballmer.
But there was no announcement from either side, and a source close to the Maloofs said Friday evening there was still no signed deal.
A spokesman for Hansen didn’t return calls seeking comment.
Sources told The Bee as recently as Thursday that the Maloof family had not received a formal offer for the team, but was expecting one very soon.
Maloofs look to be on the clock.
The family has never publicly expressed an interest in selling the team, which it has controlled since 1999. But a source close to the family said the Maloofs – battered by economic setbacks in recent years, including the loss of their Las Vegas casino – have begun warming to the idea. The team owes more than $200 million and is on track to lose up to $7 million this year, sources say.
If the Maloofs sell to the Hansen group, a tug of war could develop, with the Maloofs and Hansen squaring off against the bidder supported by the city of Sacramento.
Not that this is up to me (none of this is) but, if I could get to chose just one Maloof to retain a tiny minority stake and a single vote (without veto power), and Chris Hansen is the primary ownership decision maker, then I think about that as a possibility. It reduces the cost. Apparently, a few of the Maloof family members really do care about the team, enough to sacrifice some cash and power for the vanity. I consider doing that if all the dollars are essentially the same.
The NBA’s board of governors, comprising the league’s team owners, would have to approve both a sale and a relocation proposal. The deadline for seeking approval is March 1, although that could be pushed back.
Or not. The league has been dancing around with the Kings for a decade. Do they remember last year? Do they want to drag the deadline out while a second group attempts to assemble a deal worth less than the deal Hansen is assumed to have on the table?
Sacramento officials say a local bidder could actually buy the team more cheaply than Hansen, and the Maloofs would make just as much money.
That’s because a local buyer wouldn’t have to spend more than $100 million on moving costs – including a league relocation fee of at least $35 million and the immediate repayment of the Kings’ debt to the city, which would cost $77 million.
This statement is bad math. That $77 million doesn’t just vanish, ever. A matching offer is truly only discounted by the relocation cost.
But, it just looks like the competing dollars are going to work very hard to get there in value, and in time, and maybe still not to the Maloof’s liking.
Only time will tell, everything else is a rumor.
Thanks Baker for a thoughtful explanation of what’s going on. I agree only time will tell.
Just one correction Stern didn’t say it would be reasonable to give Burkle a chance to match any offer by the Seattle interests.
Per Jeff Zillgitt “David Stern said it was fair point from Kings fans who want Ron Burkle to have a shot at matching any offer in effort to keep team in SAC.”
Yes, I know, and everybody should know why, too, because Burke has an actual plan. He might not have the cash, though. And again, there isn’t a $100 million dollar discount, it’s the relocation cost only.
That $77 million dollar city loan doesn’t vanish, delay just means “later”.
A deal would still have to be $490 million dollars in cash and assumed debt. Does that really pencil out? Maybe.
Doesn’t mean that all things being equal that the Maloofs have to accept it
I won’t to clarify a couple points on the Sac Arena Plan. Even though the funding was approved by the city many details remained. Such as who would pay for the cost overruns. How much funding could they truly get from parking. Also remember that AGI pulled out of the project officially this last summer and took their 50m with them. No EIS was ever completed. It is easy for KJ to sat he wants to reserect the deal but a lot of work and votes would need to take place.
Seattle is at least a year ahead of the Sac plan and most likely 18 months ahead of any new plan
True, but the league was an investor and had inside knowledge of just how feasible the plan was.
I don’t think that’s an issue, either way there is a new arena involved.
I think it comes down to the Maloofs choosing cash in hand from Hansen and maybe some not-so-pleasant feelings toward KJ.
Personal opinion, this all feels like loser talk from competitors that just don’t know that the game is over. It’s face saving, that’s understandable coming from people that have worked very hard and thing a little more work matters. Sometimes it does, but maybe not now.
I’m going to flip the complaint about the city trying to get something done for a long time (fair or not), maybe the Mallofs feel the same way, that things could have gone better for them, and they have just had enough, too.
Btw, if Hansen walked, the value would drop by millions and millions of dollars. Not too many people want to mention this, but in any negotiation you need to understand your walking away point before you start negotiating.
Try this, here is my offer, $525 million so I can go to the BOG on March 1 and have the Sonics in Seattle next season, otherwise, there may be other franchises to be had if I have to wait 1 or 3 years longer, and maybe that’s what I have to shift my efforts toward.
This is just nothing more than a thought in my head. Assuming it is a done deal and we get the kings, couldn’t the delay of announcing it to give those trying to get the team to keep them here a chance to show themselves to the NBA for possible a future team either expansion or bucks, bobcats etc
I don’t mean that Hansen is really doing that but just a thought.
Not true. The cost overrun was agreed to be paid by the developer David Taylor, the man who spearheaded the agreement. AEG is still on board the deal if there is an anchor tenant, they only said they would not move forward if the city tried to build the arena without the Kings. KJ has been in constant contact with both AEG and the NBA over the last year.
Also, the City of Sacramento had received several bids of over 200 million for the parking. The next step was to pick and make the sale
If the Maloofs keep the Arena in Sac and pay off the debt they can always sell the property for 20 or 30 million to a developer which Increases there financial gain from Hansons deal. If Hanson pays off the debt on the arena on top of his current offer his deal all of a sudden would be hard to beat.
Curious to see what Hansen plan’s to do next now there are some local competition for the kings unless he plans to stick with the rumored 525m offer for the time being.
This all is giving me such a headache. I just wanna hear its freakin done already. Hahaha
Your not the only one.
+1
I think if Hansen breaks negotiations with the Maloofs, the other deals would fall a lot cause there’ll be no risk of move to Seattle. If Hansen gives an ultimatum to the Maloofs, I think they would accept it to earn the most money possible.
Another question, I remember that in the arena plan with the Maloofs was about 390m, (255 city, maloof the 135 remaining), and the Maloofs part was to be paid partially by the NBA. The issue is, if they recover this plan, do you think NBA would pay to help with the Sacramento’s Arena having the option of move the team to Seattle without cost?
Wouldn’t the NBA back out of that if a new local owner were to buy the team and KJ attempts at using the same plan?
Since it wouldn’t be necessary under a new owner.
Yeah, but then Sac may need a review of the plan, no?
I don’t know. This waiting is killing me -__-”
In theory it should since it would be under new owners not the maloofs. I don’t see why the city would agree on that same plan anyways. I hear ya on the waiting.
No. That plan was baked and ready to serve.
The league and AEG had a pretty good thing going, $200 million in direct subsidy from the city, and the city has a lot more to gain by getting something going in the rail yard.
This deal comes down to how much money the Maloofs can make.
Well, I would say he would break negotiations, but there is a greater value to him with one available team this year than waiting another year.
You start waving around that kind of money and it would get attention. If this slides a year then what other team would take the same or lower deal?
Part of the value is in the “now”.
I wonder how much an expansion team would go for these days. Robert Johnson paid $300 million for the Bobcats a decade ago (and ended up selling to MJ for less than that).
Exactly the right question.
Rumor had it pegged at around. . . $500 million.
Look at that number, nobody gets hurt, no relocation cost, but, it’s the exclusivity that inflates the value of the entire league, so, an unlikely option in the near term.
What are the Bobcats worth now?
How much to break that lease and relocate?
Pacers?
Bucks (if their arena task force fails)?
The resale value of the Kings will not get this high for a couple money bleeding years from now.
It seems more likely now than it did a few years ago, before the lockout. Then Stern was saying “no more expansion.” Now he says he “wouldn’t preclude it.” And if it comes down to the Maloofs reaching a deal with the Hansen group just as a local ownership group comes together in Sacramento, and if Stern wants to both keep Sacramento and fix what happened in Seattle, well…
I understand why the debt to Sacramento would factor into this, but not the relocation cost. That is something Hansen would have to pay on top of the $525 million isn’t it?
Yes. I have been screaming that at the tv and Internet every time someone mentions it. Thank you!!
Chris Daniels @ChrisDaniels5
On #NBAKings-to-Seattle, you’re going to hear lots o stories in coming days. It’s going to be an up/down ride for people in Sac & #Seattle.
nice of him to give us a heads up so we won’t be going crazy. I hope the end result is worth going through the up/down ride.
hopefully that means it’ll be settled sooner rather than later! i leave for the dominican republic on monday night so i might have to be checking in sporadically from the caribbean if it goes too long!
Thanks EJ for posting that and I hope the end result is worth it too.
What a strange week. I am thinking that the potential local ownership groups coming forward in Sacramento had to be known about by KJ and likely by David Stern, especially since Burkle was named by KJ at previous league meeting and such. This had to have been known about by Hansen and Ballmer’s group as well. It seems to me that Hansen has been very careful to keep the NBA in the loop about everything that he does or is planning to do. I am sure he made inquiries to persons at the NBA probably months before he had talks with the Maloofs. If it was anticipated by the NBA that there were strong local investors at the ready in Sac, and the NBA preferred those persons, wouldn’t they just have told Hansen group to stay away? Unless they wanted to use Hansen and Balmer just to get the price up and allow the team to stay in Sacramento. That seems a little bit far fetched, but I guess possible. Also I really trust Chris Hansen and if it doesn’t work out this time I’m sure he has other avenues(maybe not as readily visible). I have to say that I would much prefer an expansion team, even if it were a few years away. I hated how our team was ripped away from us, tough to do it to someone else. If it really is the only way to go about it, than it is what it is, but it is not ideal. I’m sure there are much smarter folks out there who can find massive holes in my thinking, just wanted to share my thoughts. GO SONICS!!!!! also GO HAWKS take it to the lesser birds tomorrow!!!!!!!
Not so great…
Chris Daniels@ChrisDaniels5
RT @SHowardCooper: The latest on Kings-Seattle-Sacramento after conversations with people w/ knowledge of negotiations:
http://sulia.com/channel/basketball/f/2ed497af-349e-4189-b5b3-a986eed902c8/?source=twitter
So NOW what.
we wait another year and go through this up and down again?
http://www.northwestbasketball.net/2013/01/should-seattle-fans-worry-about-local.html?m=1
this is torture.
Aaron Bruski @aaronbruski
Sacramento is the favorite to keep the Kings in my eyes based on conversations with sources close to the situation.
https://twitter.com/aaronbruski
Greg Van Dusen @theGregVanDusen
Let’s save the Kings for Sac Town! We can renovate and make this arena better than modern standards. & keep it convenient with no public $$!
greg van dusen seems to be no real player in the conversations; plan to renovate sleeptrain will not work with the nba
As Nick530 said, it turns out JMA Ventures is NOT bidding. Sac Bee got it wrong.
http://www.bizjournals.com/sacramento/blog/kelly-johnson/2013/01/mall-owner-not-bidding-on-kings-but.html?ana=&page=3
So who is the biggest problem now? Mastrov? Ron Burkle?
Mastrov
Rob McAllister @Rob_McAllister
The Mayor & Mark Mastrov talking buying the Kings in the Maloofs house in front of everyone was no accident. That’s a middle finger folks.
so i guess NBA is going to accept a lower offer bid to buy the team.
i predict that hansen ends up with sonics2 and the emergent sacramento buyers are given some encouragement that the kings legacy will remain frozen in sacramento pending a ‘someday’ return of the team via whatever means. i think it’ll be too much for the league to simply say to hansen, “oh, sit down and we’ll call you later.”
what we’re seeing out of sacramento is last-ditch positioning, layered with hope and desperation. fans are all over every rumor, interpretation, inflection, and notion. and guess what? good for them, those fans love their favorite team and hope to avoid something we understand all too well. but even the supposedly fast-gathering millionaires might well be posturing for future position, since the league doesn’t tend to like last-minute fixes as much as long-standing prospects.
but i feel pretty confident that things have advanced under the surface to a point where sonics2 is close.
a little bit offtopic, but
Attendance: 14367 on a saturday evening against the heat ;)
So with this latest batch of “info” no one really knows what the hell is going on still lol. Oh well give it a few minutes and I’m sure the next rumor will be that Hansen and Ballmer have bought the team after offering $525 million and Truck-o-saurus Rex lol.
stern never said: sacramento can match hansen’s offer
he said: it’s a fair point ;)
i don’t see the league saying “seattle gets next expansion” vaguely if the kings stay in sac. they know we only have 5 years. stern was quoted back in September as saying he’s hopeful we’ll get a team in the 5 years we have. it will have to be “we’ll expand to Seattle by a certain point in the 5 years if no team relocates there”, which from the comments from the BOG and stern last sept have me thinking this is the case. in the end, I think one city will get an expansion team, either Seattle or Sac.
Keep in mind that LA just passed a new stadium last year, 17 years after they lost the NFL. LA was not relevant until then, just empty leverage. we got our new arena approved relatively quickly compared to LA.
That’s what I see happening: either A) we get kings, Sac gets vacuum to work out a arena deal, get expansion or new team later or B) kings stay, and league commits to granting us an expansion team within the 5 years we have if we don’t relocate a team here by a certain point in the 5 years.
*the 3-5 year timeline for expansion given when the BOG and Stern were quoted last September is what makes me say this. if no team relocates here by a certain point in our 5 years, we get an expansion team. McGinn saying we last year we should expect a team 2014-15, and he hopes SAC keeps the kings was also interesting. not saying I know anything, just reading the tea leaves.
The thing that makes me nervous about the expansion option is new Seattle political leadership. I am not confident that the arena deal will withstand time.
LJG,
They can’t kill it after the approval of the 2nd vote and assuming it remains 7-2 it can’t be vetoed.
The city will be in breach of contract if they try to stop it after it gets the 2nd approval.