Kings move would hurt Lakers' TV deal?

[Mike0476]

"If a third NBA team moves into the market, however, the Lakers' television deal will decrease by about just under 10 percent, according to sources.

ESPN.com's Marc Stein reported the Lakers and Clippers have reached out to owners around the league to gain the requisite support from other teams needed to block the Kings' move but aren't hopeful that they will be successful if it comes to a vote. The eventual vote will be decided by simple majority, meaning the Lakers and Clippers must find 14 other teams to side with them to prevent the Kings from moving to Anaheim.


The Lakers' best hope of reclaiming lost revenue is citing their potentially diminished television contract to elicit a hefty relocation fee from the Kings. Relocation fees in the NBA are "discretionary" and established by the league's board of governors. The last time an NBA team relocated, the Seattle Sonics were forced to pay a $30 million relocation fee when they moved to Oklahoma City in 2008."

http://sports.espn.go.com/los-angeles/nba/news/story?id=6265516

 

[Brac-o-matic]

This is sad. Out of respect for a poor, beaten-down team like the Lakers, I think the Kings should do the honorable thing, and stay in Sac.

 

[pdxKingsFan]

If I was a billionaire looking to buy a sports franchise I'd be looking at other leagues thanks to this. Well unless I could buy some middling small market team and move them to Dallas, Chicago or NY before the Nets settle into Brooklyn. NBA will be the Subway of the major sporting leagues.

 

[LilMissDiva]

Right now the only hope left for Sacramento to keep the Kings is for the LA teams to convince enough of the other voting teams to vote against it... at least LA is making their opinion heard. Can't say I'm sad about that!

 

[Arena Skeptic]

The worst part of this, if you look at the lease, is that really what's happening here is that the Maloofs have their backs to the wall financially. This is really starting to look like a gradual Samueli takeover to me. This was the Maloofs last shot at holding on to some part of the Kings. All those posts that Larry David put here, about the Palms and the Maloofs overall? All true. The Maloofs are in big-time trouble.

All this stuff about moving to Anaheim is really just a way to allow the Maloofs some chance, however small, of holding on to the Kings. If the Anaheim move is scuttled, the Maloofs are absolutely done; they'll lose everything. It was a long-shot way to keep the Kings and the Palms, and if this move is rejected, the Maloofs will be toast.

The multiple narratives on this are all finally coming together, and it's not pretty.

The worst part of this is fans -- I admit it, you guys far more than me -- get to pay the price. It's entirely possible at this point that the Maloofs can no longer afford the Kings -- that if this move is rejected, the Maloofs lose the team, and in a fairly ugly way.

They've burned all their bridges here. By rejecting the "mystery team" over the weekend (and who among us did not see that coming?), the last bridge wasn't just burned, they got the approaches to the bridge, too.

If this move gets rejected, I don't think it's crazy to say the Maloofs will lose control of the Kings, and it may even get worse than that.

It's apparent that the Clippers and Lakers will demand huge compensation for this move, and it's money the Maloofs don't have, and Samueli won't be willing to fork over. So they stay in Burnt Bridges Land, with owners on the verge of collapse.

The best thing that could happen here is for Larry Ellison to enter the picture. Absent that, the fans in Sac are completely up Burnt Bridge Creek. The chances of an ugly end up here are very high.

I was going to go to the game this Friday. Not now; no way. It's going to get ugly.

Gad, I feel pretty awful about all this. There is no longer a chance for a "nice" end to this story; this isn't Mother Goose. We're adults, no point in sugar-coating it. We're screwed.

 

[Larry David]

I think that - if the vote fails - the team gets contracted.

The Maloofs would have no other play. They can't keep running the team here and need they money.

I'm sure at least 10 people will reply about "the Maloofs don't want to sell/regret the Rockets sale" and "the Palms and Kings are run seperately" blah blah. That's great. The facts don't match those words any more.

These guys are falling appart and have no businesses that currently make money for them. If they can't move the Kings to Anahiem for a short term year to year profits as they try to hold onto the Kings and Palms, they will be forced to cut bait on the Kings or risk bleeding out all of dad's money as they wait for both the Kings and Palms to turn around.

Because Buss: (1) wants to contract 4 teams; and (2) doesn't want the Royals/Kings to jack his TV deal ... that will be his case to the owners. Why are we letting the Royals/Kings move again? Let's just put this team down.

 

[Arena Skeptic]

I think that - if the vote fails - the team gets contracted.

The Maloofs would have no other play. They can't keep running the team here and need they money.

I'm sure at least 10 people will reply about "the Maloofs don't want to sell/regret the Rockets sale" and "the Palms and Kings are run seperately" blah blah. That's great. The facts don't match those words any more.

These guys are falling appart and have no businesses that currently make money for them. If they can't move the Kings to Anahiem for a short term year to year profits as they try to hold onto the Kings and Palms, they will be forced to cut bait on the Kings or risk bleeding out all of dad's money as they wait for both the Kings and Palms to turn around.

Because Buss: (1) wants to contract 4 teams; and (2) doesn't want the Royals/Kings to jack his TV deal ... that will be his case to the owners. Why are we letting the Royals/Kings move again? Let's just put this team down.

So does that mean San Jose and Seattle would just plain be screwed? That's a tragedy right there.

If the move to Anaheim does get rejected because of the objections from the Lakers (meaning that the Maloofs wouldn't have the money to compensate the Lakers), that means no team will ever be able to move to San Jose or San Francisco, either.

It's too bad we picked such poor owners. I guess that was our first mistake. If your owners aren't billionaires, they're just not rich enough. $2B, minimum.

 

[Arena Skeptic]

One more quick question: What kind of an incompetent government official lets the kind of purchase-leaseback agreement we had with, at the time, MSE, fall into second position so the Maloofs can borrow more from the NBA? That is now looking like the worst decision imaginable.

The Maloofs now have an escape that will allow them to leave town without paying another dime: Look at page 190 of the infamous contract; it says the City is responsible for maintenance of the arena. But look how poorly the owners have maintained the facility. That means WE broke the lease, not THEM.

We're in deep trouble here. Huge. This goes well beyond Kings fans now.

We could actually be on the cusp of a crisis the sort of which we've never seen.

 

[JB_kings]

After reading the Anaheim lease, I think the Maloofs do look desperate. It's not a sweetheart deal where Samueli gave up anything at all other than backing some bonds. The windfalls of revenue don't appear to add up to the cost of moving. That said, I think they approve the move and the relocation fee will be no more than 50 million. The Lakers and Clippers will concede the market to the Kings. But I wouldn't be surprised that some side deal will be made and revenue sharing will be taken off the table. Which will have some very nasty long term affect on the small market teams.

We are still missing some City documents pertaining to the Arco sublease back to the team. It's supposed to contain all the penalties that kick in if they relocate out of the city. But looking at the main bond agreement, the city has exposed themselves big time to be left holding the bag when they acquired the arena. This was somehow a more prudent move than a tax to build a new facility?

I don't think contraction is anything more than a bluff. Not until a team has no value in a possible sale is it worthless enough to contract. It's still better for the league to force a sale and relocate than it is to contract. They will use it as a threat in their new bargaining agreement, but it's not going to happen. There are still buyers out there and selling teams is much more lucrative than folding them.

 

[JB_kings]

One more quick question: What kind of an incompetent government official lets the kind of purchase-leaseback agreement we had with, at the time, MSE, fall into second position so the Maloofs can borrow more from the NBA? That is now looking like the worst decision imaginable.

The Maloofs now have an escape that will allow them to leave town without paying another dime: Look at page 190 of the infamous contract; it says the City is responsible for maintenance of the arena. But look how poorly the owners have maintained the facility. That means WE broke the lease, not THEM.

We're in deep trouble here. Huge. This goes well beyond Kings fans now.

We could actually be on the cusp of a crisis the sort of which we've never seen.

I haven't seen any escape clause that opens up this possibility. The sublease agreements for the facility are the most important to review and are not contained in the main bond agreement. The responsibilty could be shifted right back to the team.

The part that concerns me though is I haven't seen where the Maloofs have lined up funds to pay off the bonds. So it's not a mighty huge leap to wonder if they plan on trying to break their sublease agreement and go into litigation to resolve this.

 

[Glenn]

Gee, I agree with Arena Skeptc. I thought that was worth a separate note. The Palms and Kings cannot be talked about as a separate subject. The money comes out of or enters the Maloof families collective pockets.

I still can't add the money together so that it is affordable and will make money so the Maloofs can move and salvage the Palms which I think is the cause for what looks like a panic. The possible if not probable lockout will not help them. It will hurt them.

I don't understand why they just don't settle for this old arena and pray to the money gods. The arena is not adequate for the NBA but as a third or fourth option, it might be all that can happen for now. They then can move next year as I think no arena plan will be on the table. It may boil down to where they can end up with the most money to salvage the Palms and paying what I think is going to be significantly over a $100 mil to move is not the way to do it.

Pay arena = $76 mil
NBA relocation fee = $30 mil est.
Clippers and Lakers compensation = millions more

They get another bond/loan from Anaheim. Maybe they get another loan from Samueli who would like to make money off them. He's not the tooth fairy. There probably will be a lockout which cuts expenses but does not raise money for the Palms and does not pay the rent.

This is called "negative cash flow."

Maybe I missed something but having gone through a huge financial loss my self, I know there are times when you sell the home, do whatever it takes to keep afloat, rent the apartment and swallow your pride. In the end, everybody is alive and the only thing that REALLY is hurt is the ego, the need to be on the TV show "Las Vegas" and be seen in front of the cameras at basketball games.

The NBA still runs New Orleans. Where's the buyer? Rich people are holding on to their money and not investing whether it be in basketball teams or expanding their own operations and creating jobs. This all relates. The NBA and the Maloofs do not live in a vacuum.

Most likely the days of plenty are gone and I don't just mean for the Maloofs. Many economists see no real way out of our present doldrums. Spending habits and our supposed "needs" will have to change. All of our needs and the NBA is not exempt. Perhaps the days of the NBA quality arena are gone.

 

[Larry David]

I don't think contraction is anything more than a bluff. Not until a team has no value in a possible sale is it worthless enough to contract. It's still better for the league to force a sale and relocate than it is to contract. They will use it as a threat in their new bargaining agreement, but it's not going to happen. There are still buyers out there and selling teams is much more lucrative than folding them.

You are wrong on the math for the owners. By selling the Hornets, every owner gets a one time infusion of about 10-15 million. For twice that investment – not selling the Hornets and contracting the Kings – you free up 1/15 of the NBA future profits FOREVER. Splitting that among all of the owners, you can say it’s a just quarter of a share they are buying back.

But it’s a huge pile of money. When you consider the NBA TV deal alone brings in almost a billion dollars each year, it’s a great long term move by the owners. Which is why owners that will be around for the long term, like Buss – who have seen their profits diluted by expansion - realize its time to get smart and contract. Buy and hold owners like Sarver and shallow pocketed owners like the Maloofs will probably kill this, but its not just talk. And it certainly not a bad move over the long term.

I'm not saying it will happen. But you can't dismiss this as just leverage. And I'm certain this will be Buss's case at the owners meeting. If he wins, the Maloof are in check mate.

 

[kingsboi]

Laugh out loud, I don't see how really. It's not like people are going to tune into Royals games until they become good. When they do and the Clippers do, then yes...they will have all sorts of TV problems.

 

[Peter_Gibbons]

Pay arena = $76 mil
NBA relocation fee = $30 mil est.
Clippers and Lakers compensation = millions more

Whether the Maloofs move or not, they owe that $67 million to Sac bond holders regardless. They will borrow and pay someone else back from that point on. Its not a new incurred debt. Only the $9 million kicker is.

The only way the clips and lakers gets compensation is if they can get a tied vote and the Maloofs still insist. Then they would negotiate the compensation. But if the owners vote approve, there is not much the Clippers and buss can do.

 

[Glenn]

Laugh out loud, I don't see how really. It's not like people are going to tune into Royals games until they become good. When they do and the Clippers do, then yes...they will have all sorts of TV problems.

Reality sucks for the Clippers and whatever, doesn't it? The Lakers will do fine.

 

[Section 101]

I think that - if the vote fails - the team gets contracted.

The Maloofs would have no other play. They can't keep running the team here and need they money.

I'm sure at least 10 people will reply about "the Maloofs don't want to sell/regret the Rockets sale" and "the Palms and Kings are run seperately" blah blah. That's great. The facts don't match those words any more.

These guys are falling appart and have no businesses that currently make money for them. If they can't move the Kings to Anahiem for a short term year to year profits as they try to hold onto the Kings and Palms, they will be forced to cut bait on the Kings or risk bleeding out all of dad's money as they wait for both the Kings and Palms to turn around.

Because Buss: (1) wants to contract 4 teams; and (2) doesn't want the Royals/Kings to jack his TV deal ... that will be his case to the owners. Why are we letting the Royals/Kings move again? Let's just put this team down.

Why would they be contracted. The Kings have been one of the few teams to make money the last few years. Let me repeat, they have been making money on the Kings. Granted it has come at a reduction of player salary and other cuts, but as of this point the team is still a money maker. If the maloofs gave a firm commitment to stay in sacramento and put it in writing then attendance would go up.

I have said I think they are using Kings money to support the Palms and that's why they wont release any financials. It would look very bad to the NBA.

 

[Superman]

Most likely the days of plenty are gone and I don't just mean for the Maloofs. Many economists see no real way out of our present doldrums. Spending habits and our supposed "needs" will have to change. All of our needs and the NBA is not exempt. Perhaps the days of the NBA quality arena are gone.

I just don't see how you can reach that kind of conclusion. There are several markets that have opened new arenas or renovated existed facilities to meet current NBA standards in recent years. There are projects in development right now. The Anaheim deal is an example of an arena that can be upgraded to meet standards.

The economy sucks, and a lot of people have to pinch pennies. But professional sports, while not exempt, are different from most other businesses. And if a city (any city, not just Sacramento) cannot or will not put an arena deal together, another city somewhere else will. Orlando, with all of Florida's financial issues the past few years, put together a plan that culminated in a $480 million facility, because they didn't want to risk losing their team. There will be issues with the bonds for years to come, but those issues will be worked out, one way or the other. They have their team -- because they got an arena deal done. If not, another city would have.

I mention this, not to point the finger at Sacramento, just to say that Orlando understood that they had to step up to the plate or else someone else would, despite the economic climate.

 

[Glenn]

Whether the Maloofs move or not, they owe that $67 million to Sac bond holders regardless. They will borrow and pay someone else back from that point on. Its not a new incurred debt. Only the $9 million kicker is.

The only way the clips and lakers gets compensation is if they can get a tied vote and the Maloofs still insist. Then they would negotiate the compensation. But if the owners vote approve, there is not much the Clippers and buss can do.

Did you read and comprehend the whole note? Sorry, but I mentioned bonds and new loans. A loan or a bond is negative cash flow no matter where it is, new or old. The $9 mil kicker is about what it would cost to rent Honda for a year. But with a lockout, it is just one more burden. Add the $10 mil rent and the $9 mil and you come up with an extra $19 mil to leave. That is a significant portion of the team's salary which is under $50 (ain't gonna look it up) and by their promise, will increase quite a bit next year.

I don't think this is chump change to these people.

 

[Peter_Gibbons]

I looked up the Clippers' current TV deal and it was suppose to be a significant increase from their previous $12.5 million/yr deal. This was signed before Blake Griffin became the new prince of the league.

Not sure what significant means, but the Kings would expect somewhere around the Clippers' new deal. They actually have the OC market that they can market to more specifically so I would assume it would be around $16-$20 million for the combine deals of FoxSports + KCAL. Thats if they want to split the games up like the lakers. If not, they can sign one deal with Fox like clippers to carry all the games.

If their Sac TV deal was around $9-$10 million, that probably explains why the Maloofs want to move to Anaheim so badly. $6-10 million more a year adds up quickly.

 

[Superman]

I looked up the Clippers' current TV deal and it was suppose to be a significant increase from their previous $12.5 million/yr deal. This was signed before Blake Griffin became the new prince of the league.

Not sure what significant means, but the Kings would expect somewhere around the Clippers' new deal. They actually have the OC market that they can market to more specifically so I would assume it would be around $16-$20 million for the combine deals of FoxSports + KCAL. Thats if they want to split the games up like the lakers. If not, they can sign one deal with Fox like clippers to carry all the games.

If their Sac TV deal was around $9-$10 million, that probably explains why the Maloofs want to move to Anaheim so badly. $6-10 million more a year adds up quickly.

They could also expand their deal to include Riverside, San Bernadino and San Diego counties, work some contracts with local affiliates, etc., to squeeze more money out of it. Not just TV, but also radio. And as far as the OC is concerned, Samueli and Moreno have been looking for a way to get some lucrative media deals done. Plus, the new Pac-12 will be redoing their TV contracts. There's going to be a lot of money exchanging hands for TV contracts on the West Coast in the next couple of years.

 

[Section 101]

You are wrong on the math for the owners. By selling the Hornets, every owner gets a one time infusion of about 10-15 million. For twice that investment – not selling the Hornets and contracting the Kings – you free up 1/15 of the NBA future profits FOREVER. Splitting that among all of the owners, you can say it’s a just quarter of a share they are buying back.

But it’s a huge pile of money. When you consider the NBA TV deal alone brings in almost a billion dollars each year, it’s a great long term move by the owners. Which is why owners that will be around for the long term, like Buss – who have seen their profits diluted by expansion - realize its time to get smart and contract. Buy and hold owners like Sarver and shallow pocketed owners like the Maloofs will probably kill this, but its not just talk. And it certainly not a bad move over the long term.

I'm not saying it will happen. But you can't dismiss this as just leverage. And I'm certain this will be Buss's case at the owners meeting. If he wins, the Maloof are in check mate.

You math is wrong. The owners already had to give like $5 million each to purchase the Hornets majority share. Don't forget there are still minority owners. The owners will not be making much money when they sell the Hornets.

If the Kings were contracted the league would have to buy the team from all the owners first which means each owner would have to fork over about $15 million each.

 

[Section 101]

I looked up the Clippers' current TV deal and it was suppose to be a significant increase from their previous $12.5 million/yr deal. This was signed before Blake Griffin became the new prince of the league.

Not sure what significant means, but the Kings would expect somewhere around the Clippers' new deal. They actually have the OC market that they can market to more specifically so I would assume it would be around $16-$20 million for the combine deals of FoxSports + KCAL. Thats if they want to split the games up like the lakers. If not, they can sign one deal with Fox like clippers to carry all the games.

If their Sac TV deal was around $9-$10 million, that probably explains why the Maloofs want to move to Anaheim so badly. $6-10 million more a year adds up quickly.

Where are you getting $6-10 million more? The will be behind the Clippers.

 

[Glenn]

I looked up the Clippers' current TV deal and it was suppose to be a significant increase from their previous $12.5 million/yr deal. This was signed before Blake Griffin became the new prince of the league.

Not sure what significant means, but the Kings would expect somewhere around the Clippers' new deal. They actually have the OC market that they can market to more specifically so I would assume it would be around $16-$20 million for the combine deals of FoxSports + KCAL. Thats if they want to split the games up like the lakers. If not, they can sign one deal with Fox like clippers to carry all the games.

If their Sac TV deal was around $9-$10 million, that probably explains why the Maloofs want to move to Anaheim so badly. $6-10 million more a year adds up quickly.

When was it signed, before or after the economic crash. GE, the biggest corpration in the US and either one time or present owner of NBC paid no taxes last year so I suppose these TV outlets have money to burn.

 

[Peter_Gibbons]

Where are you getting $6-10 million more? The will be behind the Clippers.

$6-$10 mil more comparing to the Arc deal. The clippers signed in 09 before Blake Griffin became a star and got a significant increase from $12.5mil. The Clips pre Blake as a star was just like the Kings pre Tyreke winning ROY. Both were lowly teams and Clips got a big increase from $12.5mil. Another thing would be the Clips local advertising targets the same LA metro residents where as the Kings will target OC residents. The clips directly compete with the lakers for local ad revenue and still got what they got.

Fox + KCAL cannot low ball Kings to below Clippers pre Blake Griffin deal. They NEED programming to anchor their network.

 

[Section 101]

$6-$10 mil more comparing to the Arc deal. The clippers signed in 09 before Blake Griffin became a star and got a significant increase from $12.5mil. The Clips pre Blake as a star was just like the Kings pre Tyreke winning ROY. Both were lowly teams and Clips got a big increase from $12.5mil. Another thing would be the Clips local advertising targets the same LA metro residents where as the Kings will target OC residents. The clips directly compete with the lakers for local ad revenue and still got what they got.

Fox + KCAL cannot low ball Kings to below Clippers pre Blake Griffin deal. They NEED programming to anchor their network.

I think the $12.5 is the new deal.

So they are going to lose money on the TV deal just to have programming?

 

[rainmaker]

What I found interesting when looking at the espn article on the Laker tv deal, and the fact the Kings moving to Anaheim would de-value their deal by 10%, is the potential relocation fee which can be leveled towards the Maloofs for moving.

A relocation fee is up to the discretion of the league, and OKC had to pay $30M. But OKC didn't move into some one elses market, where a $3B tv deal had just been inked. Maybe I'm off here, so correct me if I'm off base, but wouldn't that mean potentially the relocation fee could be much higher in this case, given teh $3B involved?

If the Lakers have proof they would lose 10% of their $3B dollar deal, would that mean the difference could be made up in a transfer fee? Obviously nowhere near the whole difference would be made up, but right now the Lakers are claiming they have proof they'll lose 10% of that deal, or $300M. Even a fraction of that cost being added on to a relocation fee can have a dramatic affect on a potential move to Anaheim. I also don't think it's something which could be known for sure before signing on the dotted line in a few weeks, which just adds to the risk of the Maloofs. It's tough enough for them to come up with the money needed to move, but with the unknown of how much the potential relocation fee may be, which I think could end up being much higher than I originally thought, could be a deal breaker.

Or I'm just looking for hope where there is none.

 

[Peter_Gibbons]

I think the $12.5 is the new deal.

So they are going to lose money on the TV deal just to have programming?

No, the $12.5 mil is the old deal. Its stated clearly. How are Fox and KCAL going to lose money paying the Kings Clippers Pre Blake as a star money? They have the entire OC, SD, San Bernardino on and on and on.

 

[Section 101]

No, the $12.5 mil is the old deal. Its stated clearly. How are Fox and KCAL going to lose money paying the Kings Clippers Pre Blake as a star money? They have the entire OC, SD, San Bernardino on and on and on.

But those are all part of the LA market. The Lakers are already entrenched there too. Regardless of what people think, there isnt an infinate amount of advertising dollars to go around.

 

[Section 101]

What I found interesting when looking at the espn article on the Laker tv deal, and the fact the Kings moving to Anaheim would de-value their deal by 10%, is the potential relocation fee which can be leveled towards the Maloofs for moving.

A relocation fee is up to the discretion of the league, and OKC had to pay $30M. But OKC didn't move into some one elses market, where a $3B tv deal had just been inked. Maybe I'm off here, so correct me if I'm off base, but wouldn't that mean potentially the relocation fee could be much higher in this case, given teh $3B involved?

If the Lakers have proof they would lose 10% of their $3B dollar deal, would that mean the difference could be made up in a transfer fee? Obviously nowhere near the whole difference would be made up, but right now the Lakers are claiming they have proof they'll lose 10% of that deal, or $300M. Even a fraction of that cost being added on to a relocation fee can have a dramatic affect on a potential move to Anaheim. I also don't think it's something which could be known for sure before signing on the dotted line in a few weeks, which just adds to the risk of the Maloofs. It's tough enough for them to come up with the money needed to move, but with the unknown of how much the potential relocation fee may be, which I think could end up being much higher than I originally thought, could be a deal breaker.

Or I'm just looking for hope where there is none.

And like I've said the Anaheim deal establishes that losing the Kings to another arena in the market is worth $30 million to the Honda center. That should be the minimum for a team moving into the market to pay the two teams each.

 

[Glenn]

Or I'm just looking for hope where there is none.

I think it makes sense but none of us know how this reloaction fee is calculated and their are no set rules as much as I understand. It is discretionary. I know the Lakers are going to raise hell. Sterling may raise hell-lite but who will listen.

The Lakers have power.