Breton Slams Maloofs

rainmaker

Hall of Famer
#1
Great peace by Breton here. Just more terrible publicity from the Maloofs point of view. Keep it up!

It's all a smoke screen to cover up the fact that they can't make a deal because they don't have the money.

That's why the Maloof brothers, owners of the Kings, are paying an economist, lawyers, media flacks and other hangers-on to trash Sacramento.
They are saying Sacramento can't afford a downtown arena, when in truth the Maloofs can't afford it.

They are saying a downtown arena wouldn't be good for Sacramento, when in truth it wouldn't be good for the Maloofs.

And you know what? It wouldn't. These guys should have said that loudly months ago instead of participating in a charade bound to fail because they don't have the money.

Why didn't they save us all the trouble?
The Maloofs would have had to take a $67 million loan from the NBA to make a Sacramento arena deal happen – money NBA Commissioner David Stern was ready to pay.

The Kings already owe the city about that much and the franchise also is said to owe the NBA anywhere from $75 million to $100 million or more.

Adding $67 million in Stern charity would have pushed the Kings debt to around $200 million.

The Maloofs own only a bit more than 50 percent of the Kings. Forbes magazine values the team at around $300 million.

You do the math: The Maloofs' share of the Kings is worth roughly $150 million and they would have had to take on $200 million to play ball with Sacramento.
That's called being underwater, folks.

Truly upright people would have come clean honorably a long time ago instead blowing it all up at the 11th hour and blaming Sacramento.
Why did it take so long? Did Mama Maloof finally tell these guys to look at their finances and hire an antitrust lawyer to make sure KJ and Stern weren't conspiring to restrict their ability to run their team? A lawyer is always the last refuge for such people.

It's no wonder the NBA treated the Maloofs like children too young to sit at the big boys' table for a year of arena negotiations that blew up last week. No wonder a heavy hitter like Tim Leiweke – top guy at AEG, the global arena operator – could barely conceal his contempt for the Maloofs when he came to Sacramento to say he wanted an arena deal.
Read more here: http://www.sacbee.com/2012/04/18/4422141/marcos-breton-maloofs-couldnt.html#storylink=cpy
 

Kingster

Hall of Famer
#4
They are getting battered with a lot of sticks. It would be nice if somebody came along and offered them a giant carrot to get outa town.
 
#5
The Maloofs would have had to take a $67 million loan from the NBA to make a Sacramento arena deal happen – money NBA Commissioner David Stern was ready to pay.

The Kings already owe the city about that much and the franchise also is said to owe the NBA anywhere from $75 million to $100 million or more.

Adding $67 million in Stern charity would have pushed the Kings debt to around $200 million.

The Maloofs own only a bit more than 50 percent of the Kings. Forbes magazine values the team at around $300 million.

You do the math: The Maloofs' share of the Kings is worth roughly $150 million and they would have had to take on $200 million to play ball with Sacramento.
That's called being underwater, folks.
Forgive me if I'm financially ignorant, but wouldn't the Maloofs' share of the debt also be 52%? Are the loans to the Maloofs personally, or to the franchise? I hate the idiot brothers as much as the next guy, but it seems a bit disingenuous to say they only own 52% of the team's market value but 100% of the team's debt.
 
#6
Good article from Breton. Yep the last thing a millionaire who has lost his fortune can admit is that they can't afford to play with the big boys any more. Once that little bubble bursts they lose their membership to "the club". They are no longer relevant and the talk of the town. They will be the last to admit that the party is over.

But fear not Maloof family. You probably have enough in your Wells Fargo funds to keep yourselves in hookers, drugs and cosmetic surgery for the rest of your lives!
 
#7
Forgive me if I'm financially ignorant, but wouldn't the Maloofs' share of the debt also be 52%? Are the loans to the Maloofs personally, or to the franchise? I hate the idiot brothers as much as the next guy, but it seems a bit disingenuous to say they only own 52% of the team's market value but 100% of the team's debt.
No. Only the Maloofs are responsible for the debt that was taken on. The minority owners are what is called a limited partnership. They don't get a vote or say in much of the team decisions. However, they can use their shares as collateral in their own business transactions outside of the Kings as Boob Cook has done.
 
#8
Forgive me if I'm financially ignorant, but wouldn't the Maloofs' share of the debt also be 52%? Are the loans to the Maloofs personally, or to the franchise? I hate the idiot brothers as much as the next guy, but it seems a bit disingenuous to say they only own 52% of the team's market value but 100% of the team's debt.
Yes. The debt is on the team as a whole. If the Maloofs sell their 52% share, it would be natural to discount that share by 52% of the debt.

Being generous, let's say that the team is worth $400 million. The debt is ~$165 million, leaving a net worth of $240 million. And 52% of that is $125 million. So on paper, the Maloofs have a stake in the Kings that's worth $125 million or less (since the $400MM tag is being generous).
 
#9
Yes. The debt is on the team as a whole. If the Maloofs sell their 52% share, it would be natural to discount that share by 52% of the debt.

Being generous, let's say that the team is worth $400 million. The debt is ~$165 million, leaving a net worth of $240 million. And 52% of that is $125 million. So on paper, the Maloofs have a stake in the Kings that's worth $125 million or less (since the $400MM tag is being generous).
The debt is already factored into the value of the team. You double dipping it.
 
#10
No. Only the Maloofs are responsible for the debt that was taken on. The minority owners are what is called a limited partnership. They don't get a vote or say in much of the team decisions. However, they can use their shares as collateral in their own business transactions outside of the Kings as Boob Cook has done.
If this is true ( that the Maloofs own 52% of the team but 100% of the debt) then it is no wonder they don't want to sell. They'd walk away with little or nothing after a sale since all the proceeds would go to retire the debt they are responsible for.

Is there confirmation of this anywhere?
 
K

Kingsguy881

Guest
#11
^^^what does it matter? They are losing money on the Kings anyway. Sell and stop losing money or stay and keep losing money. Or move to Anaheim and take a buyout....
 
#12
This is Breton's 2nd article within a week slamming the Maloofs.

From what I've read though, the Maloofs did contact the NBA about their concerns well before the 3/6 vote. Stern confirmed receiving them and that they were all forwarded to the city.

No one is questioning why the city chose to continue with the vote knowing the Maloofs did not agree with many of the terms.
 
#13
The debt is already factored into the value of the team. You double dipping it.
I don't think that's true. When you buy a business or a house the market value is established first regardless of how much is owed by the current owner. The Kings are worth 350M-ish whether the Maloofs have 100% equity or 0% equity.
 
#14
^^^what does it matter? They are losing money on the Kings anyway. Sell and stop losing money or stay and keep losing money. Or move to Anaheim and take a buyout....
Matters because as the new CBA takes effect over the next couple of years the Maloofs may see a way to eek out 10M of profit a year by running a bottomfeeder (and letting the franchise value appreciate) vs selling and walking away now with next to nothing.

They've already alluded to this which would be a nightmare for Kings fans.
 
#15
If this is true ( that the Maloofs own 52% of the team but 100% of the debt) then it is no wonder they don't want to sell. They'd walk away with little or nothing after a sale since all the proceeds would go to retire the debt they are responsible for.

Is there confirmation of this anywhere?
Don't forget to factor in the amount they originally payed for the team, which was around 75 million. In other words, there is no way the Maloofs sell without losing 10's of millions of dollars that they will never get back. If they sell, they can't use the team as collateral on something else. Which explains why they won't sell.
 
#16
This is Breton's 2nd article within a week slamming the Maloofs.

From what I've read though, the Maloofs did contact the NBA about their concerns well before the 3/6 vote. Stern confirmed receiving them and that they were all forwarded to the city.

No one is questioning why the city chose to continue with the vote knowing the Maloofs did not agree with many of the terms.
Their "concerns" were a smokescreen. They were completely unreasonable and the council would never approve a deal with the changes they wanted. The Maloofs clearly had no intention of committing any money to the arena.
 

pdxKingsFan

So Ordinary That It's Truly Quite Extraordinary
Staff member
#17
I don't think that's true. When you buy a business or a house the market value is established first regardless of how much is owed by the current owner. The Kings are worth 350M-ish whether the Maloofs have 100% equity or 0% equity.
Except the Kings are worth however badly someone wants to own an NBA team. The values Forbes came up were based on some kind of business sense whereas if some billionaire wants a team bad enough he'll pay whatever the owners are asking or what it takes to get them to budge. Which in the case of the Kings is going to be cleaning up the Maloofs debt plus a tidy little profit. And even then I still think they are delusional enough to want to keep the team.
 
#18
This is Breton's 2nd article within a week slamming the Maloofs.

From what I've read though, the Maloofs did contact the NBA about their concerns well before the 3/6 vote. Stern confirmed receiving them and that they were all forwarded to the city.

No one is questioning why the city chose to continue with the vote knowing the Maloofs did not agree with many of the terms.
The vote was on what was agreed to on the term sheet, no? Which was who was putting up $$ amounts to get the thing built. If the Maloofs has issues with revenue splits on items off the term sheet I don't see how that would have been nearly as big a deal. But if they were honest and working in good faith they would have paid their portion of predev costs and worked toward compromises on items not worked out yet. Instead they threw out a ton of unresolved issue to mask the fact that they were backing out on what they had agreed to.
 
#19
Except the Kings are worth however badly someone wants to own an NBA team. The values Forbes came up were based on some kind of business sense whereas if some billionaire wants a team bad enough he'll pay whatever the owners are asking or what it takes to get them to budge. Which in the case of the Kings is going to be cleaning up the Maloofs debt plus a tidy little profit. And even then I still think they are delusional enough to want to keep the team.
Right. So if the Maloofs are asking someone to come in and cover 150M in debt + what they paid for the team + a big chunk of cash profit for 52% of the Kings all of a sudden they are asking for something WAY out of the norm which no one is going to pay. Burkle or Ellison may want an NBA team but they aren't going to come in and buy the Kings with a 600M valuation
 
#20
This is Breton's 2nd article within a week slamming the Maloofs.

From what I've read though, the Maloofs did contact the NBA about their concerns well before the 3/6 vote. Stern confirmed receiving them and that they were all forwarded to the city.

No one is questioning why the city chose to continue with the vote knowing the Maloofs did not agree with many of the terms.
Because they had a term sheet all the parties agreed upon. The NBA was acting as the agent for the Maloofs. All evidence points to the fact, the Maloofs just changed their minds after the fact.
 
#21
Right. So if the Maloofs are asking someone to come in and cover 150M in debt + what they paid for the team + a big chunk of cash profit for 52% of the Kings all of a sudden they are asking for something WAY out of the norm which no one is going to pay. Burkle or Ellison may want an NBA team but they aren't going to come in and buy the Kings with a 600M valuation
and don't forget that with any major sale like this, there are millions in legal fees-- gotta pay all the people who are helping to broker the deal. It's still workable if the Maloofs are willing to walk away with nothing more than their current debt being paid off through a sale, but if they want to get any of their original investment back or make a profit on that original investment, no way it's going to happen.
 
#22
Whoever said 350 already has the debt taken off the top, that's not true. The NBA doesn't use those dirty facts when talking about sales or values.

Breton's story is spot on.
 
#24
But not the 100 from the NBA. Which is why the "values" that Philly and New Orleans sold for aren't real numbers.

The Kings are the Maloofs only business and they really don't want to sell. Even without the city loan, they owe 100 and were about to put another 70 on top. They've made a little money by becoming the new Clippers of the league, but they often break even or take a loss.

How would you ever pay that off? So they went down to Orlando. Made a handshake deal. Did the math and walked away. If they were just honest, people would get past it. But they just keep lying.

They've got Grant telling fans they should be thrilled because a new arena will raise your tickets. He was yelling at people that said that 2 weeks ago, but his off the rails at this point. Within five mintues, Grant told fans that "would you want the Kings to stay if your prices went up 50% in a new arena?" and "I just hope they get back into the room and work out a new deal?" SMH
 
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funkykingston

Super Moderator
Staff member
#26
This is Breton's 2nd article within a week slamming the Maloofs.

From what I've read though, the Maloofs did contact the NBA about their concerns well before the 3/6 vote. Stern confirmed receiving them and that they were all forwarded to the city.

No one is questioning why the city chose to continue with the vote knowing the Maloofs did not agree with many of the terms.
There are a couple things to consider here.

I think the biggest reason is that a term sheet had been signed and agreed to and it wouldn't be uncommon for parties to continue to negotiate small details. That being the case it made sense to take the vote and then address minor issues after the fact since the basic framework of the deal would (supposedly) remain unchanged by these further discussions. The other is that the concerns of the Maloofs may not have been communicated to the city via the NBA. That certainly seems to be what is implied.

Either way, saying the Maloofs "had concerns" or "did not agree with many of the terms" is a bit of an understatement. Looking at what they proposed it was basically eliminating liability and costs for the Maloofs while also asking for unreasonable things such as 100% of concessions despite not contributing to the staffing, tax exemption for the arena, not paying anything for police, fire, and emergency personnel on game days, no collateral on the loan etc.

I think the part that frustrates me the most is the attempted spin that they were doing this because it was a bad deal for themselves AND the city of Sacramento. Yet ALL of the changes they asked for (and presumably would have been willing to sign a deal if made) would have put the city (and AEG) in a much worse financial position. There is a difference between having some small disagreement with a few terms and minor issues and making unreasonable demands. I agree with KJ on this - it looks as though they were simply looking for reasons NOT to do the deal and furthermore were using those demands to blow it up.

Kevin Johnson took a stance of "the deal is done, we're not renegotiating" but I think if what was being presented was reasonable they could have worked something out. But seeing the Maloofs go from saying it was a fair deal, crying tears of happiness that it was done and joining KJ at half court in a celebration to trying to completely rewrite what had been agreed to made him simply dig his heels in and realize that they weren't going to be able to work things out.

And I'm completely sickened by the whole thing. I don't see any reason to criticize the city council for proceeding with a vote. I see every reason to slam the Maloofs for their words and actions that led to the deal being killed.
 
#29
But not the 100 from the NBA. Which is why the "values" that Philly and New Orleans sold for aren't real numbers.

The Kings are the Maloofs only business and they really don't want to sell. Even without the city loan, they owe 100 and were about to put another 70 on top. They've made a little money by becoming the new Clippers of the league, but they often break even or take a loss.

How would you ever pay that off? So they went down to Orlando. Made a handshake deal. Did the math and walked away. If they were just honest, people would get past it. But they just keep lying.

They've got Grant telling fans they should be thrilled because a new arena will raise your tickets. He was yelling at people that said that 2 weeks ago, but his off the rails at this point. Within five mintues, Grant told fans that "would you want the Kings to stay if your prices went up 50% in a new arena?" and "I just hope they get back into the room and work out a new deal?" SMH
It was a ploy to keep ticket sales up and have people re-up on season tickets for next season.