Kings reject request for written assurance of loan repayment

[RookieOfTheDay]

Things are going from ugly to downright nasty. http://www.sacbee.com/2011/04/05/3528111/kings-reject-sacramentos-demand.html I don't blame the city for asking. With all the reports of Maloof financial problems, they probably don't have an extra 77 million lying around. I just hope they don't skip town and welch on the loan. i think it's a more realistic possibility than some people may think. Whether the Maloofs intend or want to pay it really doesn't matter if they don't have the money.

 

[Gary]

Moving the team right now just made no sense. They have to repay the 77mil + whatever the relocation fees are. With that amount they could have worked out some kind of arena deal to at least get it up and going. I can't see this ending well, and I can't see the Maloofs wanting to repay the city.

 

[Geoff]

Anaheim had voted to cover whatever relocation fees would be charged.

 

[Brac-o-matic]

Moving the team right now just made no sense. They have to repay the 77mil + whatever the relocation fees are. With that amount they could have worked out some kind of arena deal to at least get it up and going. I can't see this ending well, and I can't see the Maloofs wanting to repay the city.

True...but I can't see David Stern allowing the move if it means screwing over the city by NOT repaying the loan...

 

[Capt. Factorial]

Anaheim had voted to cover whatever relocation fees would be charged.

Umm...no. Anaheim voted to issue $75M worth of bonds, $25M of which was to go towards building a practice facility and $50M of which could be used for whatever expenses were necessary. That's different than voting to cover all relocation fees - especially as we don't know what the relocation fees might be. The Kings would be moving into a larger, already-occupied market, which might suggest larger relocation fees. On top of that, the Lakers and Clippers will probably ask for territorial frights fees on top of that. And the $77M owed to the city of Sacramento is hardly a "relocation" fee.

 

[ArcoKings]

Anaheim had voted to cover whatever relocation fees would be charged.

I don't think this $77 million for the Kings loan was part of the deal.

With the fees/expenses to relocate to Anaheim high I'm starting to doubt that the Kings will move to Anaheim. Something is telling me they're staying.

 

[floydian]

I don't think this $77 million for the Kings loan was part of the deal.

With the fees/expenses to relocate to Anaheim high I'm starting to doubt that the Kings will move to Anaheim. Something is telling me they're staying.

I'm leaning towards this as well. Once you look at the costs it is quickly getting out of hand and hard to believe the Maloofs have the income to pay it all off.

$25 Million upgrades to Honda
~$50 Million for NBA relocation fees (might be as low as $30 Million)
$77 Million to pay off Sac City (actually bond holders)

That is $152 Million right there and doesn't even include what the Lakers and Clippers might want in territorial right fees.

Overall I see this costing the Maloofs over 200 Million before they can officially move. I just have a hard time believing they can take on this cost or receive a loan to cover the costs above the 75 million they will receive from Anaheim. Especially since it is well documented that investment firms (TPG/Harrah's) is trying to purchase controlling stake in the Palms Casino to help restructure their Debt.

If the Maloofs do find the cost of moving prohibitive.....I would fire any consultants/lawyers that they had as this is something they should have seen coming from miles away.

 

[Bricklayer]

This is only a stroy if you are not a lawyer. There is noway in hell as a lawyer you would ever allow your client to sign a "written assurance" or anything like that when heading into a potentially contentious period that could include lawsuits etc. It could, and no doubt would, be used against you under any number of legal theories.

There is a contract in place already. The Maloofs are under absolutely no legal obligation to throw some sort of intent writing on top of it. Indeed they would be very stupid to do so. Thsi really isn't much of an upgrade of nastiness -- its the inevitable "yeah, right buddy" response that anybody represented by competent counsel would return.

 

[Glenn]

Anaheim had voted to cover whatever relocation fees would be charged.

Anaheim City Council voted to float a bond for renovation of Honda and to help the Maloofs. The bond has been purchased by three legal entities all ownerd by Samueli. The amount was $75 mil and it was not open ended as you suggest. I was watching the meeting and the vote. Take my word for it or go to Anaheim.net and watch a replay. They get right to it as it ws a special meeting so it won't take much time.

 

[PurpleHaze]

This is only a stroy if you are not a lawyer. There is noway in hell as a lawyer you would ever allow your client to sign a "written assurance" or anything like that when heading into a potentially contentious period that could include lawsuits etc. It could, and no doubt would, be used against you under any number of legal theories.

There is a contract in place already. The Maloofs are under absolutely no legal obligation to throw some sort of intent writing on top of it. Indeed they would be very stupid to do so. Thsi really isn't much of an upgrade of nastiness -- its the inevitable "yeah, right buddy" response that anybody represented by competent counsel would return.

Just shows how stupid and childish the incompetent city council of Sacramento is - again! Want more insanity? Now about a new state of California "Kings law," to bar a team from moving unless it pays its debt - proposed by the bozo, with nothing better to do, head of state senate Darrell Steinberg. How about California pays off its huge defaulting debt first - senator stupid!!

http://www.kcra.com/news/27438476/detail.html

 

[Bricklayer]

Just shows how stupid and childish the incompetent city council of Sacramento is - again! Want more insanity? Now about a new state of California "Kings law," to bar a team from moving unless it pays its debt - proposed by the bozo, with nothing better to do, head of state senate Darrell Steinberg. How about California pays off its huge defaulting debt first - senator stupid!!

http://www.kcra.com/news/27438476/detail.html

Now see, on the other hand, that's dumb, but if you are Sacramento there is no reason NOT to go for it. You want to bollix up the works however you can. There is no approach too fr fetched to consider. You HAVE to stop this. If it takes pouring sugar into the gas tanks of the moving vans, then so be it. All is fair in love, or this case, war.

 

[Glenn]

I don't think this $77 million for the Kings loan was part of the deal.

With the fees/expenses to relocate to Anaheim high I'm starting to doubt that the Kings will move to Anaheim. Something is telling me they're staying.

Now I'm going to scream! I have never thought they could afford to move. Why, oh why don't you just honor the wisdom of my age, brilliance, and experience. Sigh!

 

[Glenn]

There is a contract in place already. The Maloofs are under absolutely no legal obligation to throw some sort of intent writing on top of it. Indeed they would be very stupid to do so. Thsi really isn't much of an upgrade of nastiness -- its the inevitable "yeah, right buddy" response that anybody represented by competent counsel would return.

I understand this and many people understand this, I hope. I presume the intent is to make the Maloofs look bad if they don't comply which actually may legally be nothing more than a request. It's an important point though that if the Maloofs stiff the city, the NBA will be unhappy because as far as I can tell, Stern is all about reputation, universiality, and the like. Taking advantage of a small market to enrich the pockets of the already rich (perception not reality) is NOT what he wants.

 

[Section 101]

Just shows how stupid and childish the incompetent city council of Sacramento is - again! Want more insanity? Now about a new state of California "Kings law," to bar a team from moving unless it pays its debt - proposed by the bozo, with nothing better to do, head of state senate Darrell Steinberg. How about California pays off its huge defaulting debt first - senator stupid!!

http://www.kcra.com/news/27438476/detail.html

But it does make sense. California doesnt want it's cities in lawsuits against each other. This isn't just about the Kings. You have rumors of the Warriors potentially moving and they have been in lawsuits over lease money. The 49ers, A's, Raiders and Chargers all have had rumors about moving. Basically the law would say they need to have all current city debts paid before moving. I don't think that is unreasonable.

 

[Section 101]

Now see, on the other hand, that's dumb, but if you are Sacramento there is no reason NOT to go for it. You want to bollix up the works however you can. There is no approach too fr fetched to consider. You HAVE to stop this. If it takes pouring sugar into the gas tanks of the moving vans, then so be it. All is fair in love, or this case, war.

Does it also give a hint that maybe the Maloofs think the $25 million and the Arena would be considered payment in full? They never said they would pay the $77 million just their obligation would be paid.

 

[Glenn]

Does it also give a hint that maybe the Maloofs think the $25 million and the Arena would be considered payment in full? They never said they would pay the $77 million just their obligation would be paid.

I don't think the documents Fireplug unearthed say this.

 

[Peter_Gibbons]

IF the Maloofs really want to pay back the $77mil loan, they can. They certainly have the financial ability. They are having problems with Palms, but they do hold A LOT of Wells Fargo stock.

Before the financial crisis, they held about 5 million WFC shares. No one knows if they bought more on the cheap during that time or panic and sold some. I doubt they would be that dumb to sell during the low point. Now, they CAN sell about 2 million shares today and be able to pay back most of the loan (I assume they can scrap up another $10 mil or so somewhere). But a smart businessman wouldn't do that because thats a dumb move since WFC's value is going to continue to go up consistently. But if they really wanted to, they do have the money.

 

[Glenn]

IF the Maloofs really want to pay back the $77mil loan, they can. They certainly have the financial ability. They are having problems with Palms, but they do hold A LOT of Wells Fargo stock.

Before the financial crisis, they held about 5 million WFC shares. No one knows if they bought more on the cheap during that time or panic and sold some. I doubt they would be that dumb to sell during the low point. Now, they CAN sell about 2 million shares today and be able to pay back most of the loan (I assume they can scrap up another $10 mil or so somewhere). But a smart businessman wouldn't do that because thats a dumb move since WFC's value is going to continue to go up consistently. But if they really wanted to, they do have the money.

Assuming everything you say is true, if they cashed in stocks in a company that knows what is doing to invest in a company that doesn't know what it's doing, themselves, it would be foolish.

 

[Peter_Gibbons]

Assuming everything you say is true, if they cashed in stocks in a company that knows what is doing to invest in a company that doesn't know what it's doing, themselves, it would be foolish.

Yea, as I said.. it would be a dumb move.

 

[Fireplug]

If anything was a "Well, duhhhh!" moment in all of this it is that the Maloofs were going to refuse to write another "I promise" note right now.

This is all media posturing right now.

 

[Section 101]

IF the Maloofs really want to pay back the $77mil loan, they can. They certainly have the financial ability. They are having problems with Palms, but they do hold A LOT of Wells Fargo stock.

Before the financial crisis, they held about 5 million WFC shares. No one knows if they bought more on the cheap during that time or panic and sold some. I doubt they would be that dumb to sell during the low point. Now, they CAN sell about 2 million shares today and be able to pay back most of the loan (I assume they can scrap up another $10 mil or so somewhere). But a smart businessman wouldn't do that because thats a dumb move since WFC's value is going to continue to go up consistently. But if they really wanted to, they do have the money.

You are also assuming those stocks aren't collateral on other loans.

 

[Section 101]

I don't think the documents Fireplug unearthed say this.

I didn't say thats what the documents said, I said that is what the Maloofs believe.

 

[The Hammer]

And I believe, under the contract that's currently in place regarding the Arena, that if the Owners of the Team default on the loan, the City simply takes back ownership of the building. Unfortunately, the property is now worth less, a lot less, (something like 35 mil) than what is owed, due to the real estate collapse. It is underwater. That, and the condition the building is in no doubt devalues the property. So, I don't know what they were thinking when the contract was made, probably they weren't foreseeing a real estate collapse, but even without that... would the building not at some point have gone underwater during the normal payment schedule simply due to normal deterioration???

From what I understand, the contract simply states that if they default, the city takes the property. Pretty normal for property loans. And that is a risk the lender takes. In this case, the City of Sac. Now would that force the Maloofs into bankruptcy? You can bet lawyers on both sides are studying up hard on all these issues right now. From a PR point of veiw, that would be a disaster for the Maloofs, and it may force them to relinquish their stake in the team, or at least part of it, down to less than a controlling share... over to... the courts?? The bank that lent them the money for the Palms? The City of Sac itself (as one of their creditors)? Don't know.

I mean what are wer really looking at if the Maloofs skip town before paying the debt? Can the City do nothing as long as payments are being made on schedule? We already have Joe Maloof making a statement in the paper that "all debts will be paid" or some such.

Is there any way this contract is made public? Is it public information at this point?

 

[Capt. Factorial]

And I believe, under the contract that's currently in place regarding the Arena, that if the Owners of the Team default on the loan, the City simply takes back ownership of the building. Unfortunately, the property is now worth less, a lot less, (something like 35 mil) than what is owed, due to the real estate collapse. It is underwater. That, and the condition the building is in no doubt devalues the property. So, I don't know what they were thinking when the contract was made, probably they weren't foreseeing a real estate collapse, but even without that... would the building not at some point have gone underwater during the normal payment schedule simply due to normal deterioration???

From what I understand, the contract simply states that if they default, the city takes the property. Pretty normal for property loans. And that is a risk the lender takes. In this case, the City of Sac. Now would that force the Maloofs into bankruptcy? You can bet lawyers on both sides are studying up hard on all these issues right now. From a PR point of veiw, that would be a disaster for the Maloofs, and it may force them to relinquish their stake in the team, or at least part of it, down to less than a controlling share... over to... the courts?? The bank that lent them the money for the Palms? The City of Sac itself (as one of their creditors)? Don't know.

I mean what are wer really looking at if the Maloofs skip town before paying the debt? Can the City do nothing as long as payments are being made on schedule? We already have Joe Maloof making a statement in the paper that "all debts will be paid" or some such.

Is there any way this contract is made public? Is it public information at this point?

In another thread on this forum (link) Fireplug has been going through the extensive legal documentation and has found a "put-order" which appears to require the team to buy the arena back at full loan value (not market value) upon relocation. I'd suggest going through that thread thoroughly for other answers and for a link to the legal docs.

 

[The Hammer]

In another thread on this forum (link) Fireplug has been oging through the extensive legal documentation and has found a "put-order" which appears to require the team to buy the arena back at full loan value (not market value) upon relocation. I'd suggest going through that thread thoroughly for other answers and for a link to the legal docs.

Wow. If true, that does make the relo costs quite high. But hey... then they own an arena in Sac! A little ironic if you ask me.

Starting to think this all may be a huge bluff (or at least a move to motivate) to get the City/region/local biz leaders to get their **** together and get an arena built. That of course would be the fairy tale ending for Sac.

 

[RookieOfTheDay]

Now I'm going to scream! I have never thought they could afford to move. Why, oh why don't you just honor the wisdom of my age, brilliance, and experience. Sigh!

I never thought they could afford it, either. Which is why I was so caught off guard when they started seriously proceeding with it. I was telling one of my friends back in January that there was no way in hell they'd ever actually try and move to Anaheim. I mentioned all the usual stuff, the 77 million, the relocation fees, the Honda center not being anything special, etc. So boy was i surprised on Feb 23rd to hear they were actually trying to move there in spite of that stuff. it means they're either really desperate, really stupid, or just secretly hate Sacramento and would have liked to be in SoCal this whole time. Or, one other possibility, is that they've got some additional under the table deal with Samueli that no one but them knows about.

 

[Glenn]

I didn't say thats what the documents said, I said that is what the Maloofs believe.

You can't let anything go, can you? It is all about being absolutely right. I don't like that and you are now on "ignore." I really don't think a guy who has a major part of his agenda just to aggravate people adds anything to this so why should I bother to read?