Breton Slams Maloofs
- Thread starter rainmaker
- Start date
They are not losing money on the Kings.
By keeping the salaries at a minimum, cutting down operating cost like they have done and the new shared revenue structure as part of the new CBA, its impossible to make a loss on the team.
Now if you want a good to great coach, a good coaching panel, good development coaches, good front office personnel and a a good play off team and possibly a contender, then you definitely can lose money but not the cheap way Maloofs have gone about it.
By keeping the salaries at a minimum, cutting down operating cost like they have done and the new shared revenue structure as part of the new CBA, its impossible to make a loss on the team.
Now if you want a good to great coach, a good coaching panel, good development coaches, good front office personnel and a a good play off team and possibly a contender, then you definitely can lose money but not the cheap way Maloofs have gone about it.
The Kings aren't the only source of wealth for the Maloofs, don't they own like 300 million in Wells Fargo stock or something like that? I wonder if they've borrowed against that already.
I think the assertion that the Maloofs are wary of the deal because it would indeed technically bankrupt the Kings is correct. They can't afford to take on any more debt. That's why I think the Anaheim deal itself is puzzling because no matter if they stay, or move, they're basically in the same boat, taking on debt over and above their share of the Kings worth. I guess they figure in Anaheim the team will be worth more and that would offset the difference?
I think the assertion that the Maloofs are wary of the deal because it would indeed technically bankrupt the Kings is correct. They can't afford to take on any more debt. That's why I think the Anaheim deal itself is puzzling because no matter if they stay, or move, they're basically in the same boat, taking on debt over and above their share of the Kings worth. I guess they figure in Anaheim the team will be worth more and that would offset the difference?
At least according to the Maloofs, but who knows, tomorrow they could very well maintain that they've been losing money for years. I mean, for years we heard about how dingy Arco was and how they needed a new arena financed by the city, they got it and now they're asking for the very thing they've protested for years, staying at that same dingy building with some renovations.
I'd have to try and find the info, but the main guy from the league who helped negotiations with the city over the last year said that the Maloofs had requested those changes during negotiations, but they were all resolved before the term sheet was signed in Orlando.
Yes, there were details to work out, but all those changes had supposedly already been dealt with. So even though the terms of the agreement were non-binding, it's clear the Maloofs signed it in bad faith, never intending to honor it at all. My guess is they wanted to get as many season ticket deposits as they could, before blowing up the deal.
To sign it in the first place was just slimy of them.
Yes, there were details to work out, but all those changes had supposedly already been dealt with. So even though the terms of the agreement were non-binding, it's clear the Maloofs signed it in bad faith, never intending to honor it at all. My guess is they wanted to get as many season ticket deposits as they could, before blowing up the deal.
To sign it in the first place was just slimy of them.
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They used to be losing money when the payroll was over or close to the luxury tax. That's when they took out a loan.
Since then, they've kept their payroll very low. In fact, these past 2 seasons have seen the team at the minimum level. Last year it was 75% of the cap which was around $43 million and the new collective bargaining agreement upped the number to 85% this season so the payroll is closer to $50 million but still low enough for them to profit nicely.
Since then, they've kept their payroll very low. In fact, these past 2 seasons have seen the team at the minimum level. Last year it was 75% of the cap which was around $43 million and the new collective bargaining agreement upped the number to 85% this season so the payroll is closer to $50 million but still low enough for them to profit nicely.
Is it fair to say the Maloofs are slumlords? They've got a property that is underwater. They can't sell it. But it still cash flows. So they do the absolute minimum in "maintenance" while they continue to milk all the cash flow they can possibly get out of it. Next thing that happens is that building inspector doesn't give the arena a pass and they have to upgrade for the safety of the public. That causes the cash flow to go in the red. Then what happens? They declare bankruptcy?
I don't think that's totally right on the timeline. They might have taken an NBA loan in the glory days or season after, but the NBA's line of credit was bumped up in 2008 when the world market fell off the map. It's my recollection that the Kings didn't paying tax post 2008. In fact, they gave Salmons away to get out from under Miller's contract and slash salary around the time NBA put out the lifeline line of credit.
They might have lost some money in those seasons, but nowhere near the size of the monster line of credit that was extended to all NBA teams and totally eaten up by the Kings.
My hunch is that they've used all of their own funds into trying to save the Palms, and the credit is being used up for a lot of expenses that other owners would just foot. So losses yes. But, it's not just a huge tax bill.
To be clear, I'm not saying they took money from the Kings and used it on the Palms. I'm saying every time they needed a dollar for the Kings that wasn't on hand, they put it on the credit card.
And if they could take an of the NBA's line of credit to throw it at the Palms, I'd bet anything they did.
They might have lost some money in those seasons, but nowhere near the size of the monster line of credit that was extended to all NBA teams and totally eaten up by the Kings.
My hunch is that they've used all of their own funds into trying to save the Palms, and the credit is being used up for a lot of expenses that other owners would just foot. So losses yes. But, it's not just a huge tax bill.
To be clear, I'm not saying they took money from the Kings and used it on the Palms. I'm saying every time they needed a dollar for the Kings that wasn't on hand, they put it on the credit card.
And if they could take an of the NBA's line of credit to throw it at the Palms, I'd bet anything they did.
I think that's what they did in part. Otherwise, where did the $100 million go? They didn't put anything or very little into the arena. They cut back on staff/sales etc. Player salaries? They had to put some of their revenues back in from tickets/parking etc so that should have been covered. And they were reported to break even or make a profit. They didn't use it to pay off the city bonds. So where did the $100 million go?
The city knew the Maloofs have concerns and doesn't agree with the existing deal prior to the 3/6 vote or there after. And let me say that it doesn't mean you have to agree with the changes proposed by the Maloofs. The city can feel that the demands are unrealistic, but since there is so many concerns, why did they pretend there was no problems until the Maloofs blew it up to the press?
George Maloof's presentation showed that they did not want to agree to the deal and didn't want to announce an agreement but the city wanted to. Stern supposedly stepped in and said something like "lets just say we agree to the framework of a deal" in order to keep things positive. Remember, they were literally days before the 3/1 deadline and it woudln't have looked good to the public if the 2 sides walked away in Orlando without even that framework. George disclosed this info to the public with the NBA watching. I don't think he can make that up without the city or NBA calling him out on this specifically.
When someone asked KJ during his press conference regarding the Maloofs' claims of having sent a number of concerns, KJ kind of goes around it by mentioning how they joined hands at center court. David Stern acknowledges that the Maloofs did send all those emails that they showed to the public and that the NBA did send them to the city. However much they disagree with the Maloofs, the city should've known that there would be problems well before. But KJ said he didn't know about those concerns until after? What happen there?
I know people hate the Maloofs right now, but clearly they are not the only ones not telling the 100% truth.
2/27 in Orlando:
George Maloof: "I think it is a fair deal. We gave a lot. Everybody had to give. Sometimes you have to take chances, and we think this is worth taking."
So he was lying on 2/27 but being truthful on 4/13? Can you accept that he changed his mind on the deal after 2/27? Because the NBA and City would agree that is what happened. It's okay to admit that he is going back on the term sheet because it was non-binding.
Too much "he said - she said" anyway. None of it matters one bit. If you view the whole situation from any angle, the Maloofs have no business operating an NBA basketball team. In Sacramento or anywhere else. Anyone who thinks they should are being deceptive or naive. Sacramento did everything asked of it by the NBA in order to keep their team. The factors out it's control were that the owners ran up so much debt on the team over the years that everyone is trying to jockey far enough away from holding the bag when the music stops. None are trying harder than the Maloofs themselves. That's the sad truth.
George Maloof: "I think it is a fair deal. We gave a lot. Everybody had to give. Sometimes you have to take chances, and we think this is worth taking."
So he was lying on 2/27 but being truthful on 4/13? Can you accept that he changed his mind on the deal after 2/27? Because the NBA and City would agree that is what happened. It's okay to admit that he is going back on the term sheet because it was non-binding.
Too much "he said - she said" anyway. None of it matters one bit. If you view the whole situation from any angle, the Maloofs have no business operating an NBA basketball team. In Sacramento or anywhere else. Anyone who thinks they should are being deceptive or naive. Sacramento did everything asked of it by the NBA in order to keep their team. The factors out it's control were that the owners ran up so much debt on the team over the years that everyone is trying to jockey far enough away from holding the bag when the music stops. None are trying harder than the Maloofs themselves. That's the sad truth.
I want to understand your position a bit better.
Are you saying that when all the parties came out in Orlando they basically were mis-leading the public with their statements regarding the progress that they made? Basically trying to make it sound better than it was due to the upcoming March deadline which they had originally implemented?
It's possible that is what happened, I wasn't in the room and have no idea what might have been discussed.
I started the other thread (What do the Maloofs want) because I wanted to people to know what terms the NBA had negotiated on behalf of the Maloofs prior to Orlando, and what new terms the Maloofs were bringing to the table.
So let's say that all the parties got together and decided to spin the negotiations a bit to show it in a more favorable light, but knowing that there were issues that still needed to be worked out.
If that's the case, here are a couple of questions:
1.) Were all the parties aware of what the Maloofs wanted to re-negotiate while they were at Orlando.
2.) Why would the Maloofs put themselves into a PR Apocolypse by doing what they did in the public eye, especially if all parties knew that this might happen?
If the parties did agree to spin it, I'm going to guess that there is no way that the City and the NBA had any idea regarding the severity of the Maloof's objections. I listed 8 big-ticket items that the Maloofs wanted to change, and I believe that at least 5 of them are complete show-stoppers as far as the City goes.
I don't know if KJ would have gone to the public and said we had a deal if he knew that the Maloofs were not going to go forward until those 8 previously negotiated items were dealt with in the Maloof's favor.
Then there are the 7 new items added to the Term sheet. Of those, I believe that 2 are absolute deal-breakers for the City. (Not paying City Taxes & Not having new owner bound by Term Sheet)
The other 5 could probably be negotiated with to a certain point and after some give-and-take things worked out.
So again, would KJ really go out and say there was a deal if he knew that part of the deal was to allow the Maloofs to sell the team, and the new owner would not be bound by the 30-year agreement?
Which brings me to my last point.
Let's say that they all knew they didn't have close to a deal. Let's also say the City knew the Maloofs had Terms which was simply unacceptable to them (No Collateral, No Cost Overruns, No 30-year agreement, No City Taxes, New Owner can move the team, ect.) and therefore no deal was really going to get done.
If you're the Maloofs and you know that you have provisions in there which are simply unacceptable, why do you agree to go out to the Public and say otherwise. Why do you allow the City Council to vote on it, why do you go to Arco and celebrate, all the while knowing that you're going to have to kill the deal as soon as it's time to pay some money?
It's complete PR suicide to knowingly and willingly walk down that path.
If it's true that the City, Stern, & the Maloofs spun things in a positive manner in Orlando, here's my take:
I believe that Maloofs brought up some objections and said that they weren't really comfortable with the deal, but that these points could be negotiated later.
My guess is the Maloofs did not bring up any 'Deal-breakers' while in discussions with Stern and KJ.
They probably brought up some of the following items:
1.) More control over final design, construction, & implementation of items relating to the Kings.
2.) Being able to use ESC for Practice and Team Events
3.) More control for ESC signage and naming rights
4.) More control on venders used in the ESC and construction of restaurants in areas surrounding ESC.
5.) MSE-only suite
6.) Benchmarks to be met
In my opinion all of the above could probably be negotiated to some extent, and if the Maloofs brought up items of this nature in Orlando, then the City and NBA would probably have been comfortable saying that they had a broad framework in place.
I think the Maloofs surprised everyone when they released the Term Sheet they wanted, because it's akin to saying that we're not doing a deal because you (the City) have to reject these terms.
If it's true that both the City and the Maloofs knew a deal wouldn't get done, then I think it paints the Maloofs as even more inept than they've already shown, because they basically set themselves up for PR assassination, and are now expressing surprise that they are getting blown out of the water.
Are you saying that when all the parties came out in Orlando they basically were mis-leading the public with their statements regarding the progress that they made? Basically trying to make it sound better than it was due to the upcoming March deadline which they had originally implemented?
It's possible that is what happened, I wasn't in the room and have no idea what might have been discussed.
I started the other thread (What do the Maloofs want) because I wanted to people to know what terms the NBA had negotiated on behalf of the Maloofs prior to Orlando, and what new terms the Maloofs were bringing to the table.
So let's say that all the parties got together and decided to spin the negotiations a bit to show it in a more favorable light, but knowing that there were issues that still needed to be worked out.
If that's the case, here are a couple of questions:
1.) Were all the parties aware of what the Maloofs wanted to re-negotiate while they were at Orlando.
2.) Why would the Maloofs put themselves into a PR Apocolypse by doing what they did in the public eye, especially if all parties knew that this might happen?
If the parties did agree to spin it, I'm going to guess that there is no way that the City and the NBA had any idea regarding the severity of the Maloof's objections. I listed 8 big-ticket items that the Maloofs wanted to change, and I believe that at least 5 of them are complete show-stoppers as far as the City goes.
I don't know if KJ would have gone to the public and said we had a deal if he knew that the Maloofs were not going to go forward until those 8 previously negotiated items were dealt with in the Maloof's favor.
Then there are the 7 new items added to the Term sheet. Of those, I believe that 2 are absolute deal-breakers for the City. (Not paying City Taxes & Not having new owner bound by Term Sheet)
The other 5 could probably be negotiated with to a certain point and after some give-and-take things worked out.
So again, would KJ really go out and say there was a deal if he knew that part of the deal was to allow the Maloofs to sell the team, and the new owner would not be bound by the 30-year agreement?
Which brings me to my last point.
Let's say that they all knew they didn't have close to a deal. Let's also say the City knew the Maloofs had Terms which was simply unacceptable to them (No Collateral, No Cost Overruns, No 30-year agreement, No City Taxes, New Owner can move the team, ect.) and therefore no deal was really going to get done.
If you're the Maloofs and you know that you have provisions in there which are simply unacceptable, why do you agree to go out to the Public and say otherwise. Why do you allow the City Council to vote on it, why do you go to Arco and celebrate, all the while knowing that you're going to have to kill the deal as soon as it's time to pay some money?
It's complete PR suicide to knowingly and willingly walk down that path.
If it's true that the City, Stern, & the Maloofs spun things in a positive manner in Orlando, here's my take:
I believe that Maloofs brought up some objections and said that they weren't really comfortable with the deal, but that these points could be negotiated later.
My guess is the Maloofs did not bring up any 'Deal-breakers' while in discussions with Stern and KJ.
They probably brought up some of the following items:
1.) More control over final design, construction, & implementation of items relating to the Kings.
2.) Being able to use ESC for Practice and Team Events
3.) More control for ESC signage and naming rights
4.) More control on venders used in the ESC and construction of restaurants in areas surrounding ESC.
5.) MSE-only suite
6.) Benchmarks to be met
In my opinion all of the above could probably be negotiated to some extent, and if the Maloofs brought up items of this nature in Orlando, then the City and NBA would probably have been comfortable saying that they had a broad framework in place.
I think the Maloofs surprised everyone when they released the Term Sheet they wanted, because it's akin to saying that we're not doing a deal because you (the City) have to reject these terms.
If it's true that both the City and the Maloofs knew a deal wouldn't get done, then I think it paints the Maloofs as even more inept than they've already shown, because they basically set themselves up for PR assassination, and are now expressing surprise that they are getting blown out of the water.
It all comes down to revenue projections. Once they really crunched the numbers in the weeks after Orlando, they realized that there wasn't enough profit in it for them considering the amount of debt they have. I'm sure even using the most optimistic revenue projections didn't do enough for them.
I'm guessing that going into Orlando, they had no expectations that something would be done but the city, AEG, and the NBA presented offers that were beyond their expectations. They thought it could work but still had some reservations, and then realized that they'd be getting in over their heads. I don't fault them for any of this-- I've been in a similar position (much smaller scale of course) trying to buy houses in the past and getting fairly far along in the process before realizing that it just wasn't adding up. I'm sure the homeowners, realtors, and mortgage brokers I worked with were pissed and felt like I wasted their time, but it also happens all the time and in the end it's my money and debt, not theirs.
I get that people change their minds. And these guys are particularly wishy washy and that's not news. But their behavior since then is what's caused the irrepairable damage-- instead of being clear to the NBA that the numbers weren't working out, they made insane demands that they knew for a fact the city wouldn't approve of, the leaked the story to the LA Times (most likely), for some strange reason they decided it was better to go meet with the BOG instead of the city, they hired a shady economist that has represented Anaheim of all places to tell the whole world how Sacramento isn't a viable market, etc. This is the behavior that makes me suspicious of their motives throughout this process, and why I feel they can no longer be trusted.
I'm guessing that going into Orlando, they had no expectations that something would be done but the city, AEG, and the NBA presented offers that were beyond their expectations. They thought it could work but still had some reservations, and then realized that they'd be getting in over their heads. I don't fault them for any of this-- I've been in a similar position (much smaller scale of course) trying to buy houses in the past and getting fairly far along in the process before realizing that it just wasn't adding up. I'm sure the homeowners, realtors, and mortgage brokers I worked with were pissed and felt like I wasted their time, but it also happens all the time and in the end it's my money and debt, not theirs.
I get that people change their minds. And these guys are particularly wishy washy and that's not news. But their behavior since then is what's caused the irrepairable damage-- instead of being clear to the NBA that the numbers weren't working out, they made insane demands that they knew for a fact the city wouldn't approve of, the leaked the story to the LA Times (most likely), for some strange reason they decided it was better to go meet with the BOG instead of the city, they hired a shady economist that has represented Anaheim of all places to tell the whole world how Sacramento isn't a viable market, etc. This is the behavior that makes me suspicious of their motives throughout this process, and why I feel they can no longer be trusted.
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In general, I agree.
I think that MSE may have provided some/all of these items that are "deal breakers" to the NBA and the City/NBA (in their negotiations) decided that they were not going to fly. I think the NBA told MSE that the term sheet (as voted on by the City) was a negotiated final term sheet but MSE may not have liked that these terms were stricken. I don't know why MSE then agreed to the term sheet in Orlando, unless it was just for PR and to keep fans coming to the arena for the rest of this season (until the NBA BOG meeting). They then "resurrected" the "disputed" terms in order to sink the deal because they still want to move to Anaheim and don't want to commit to Sacramento. You can see by the MSE-requested term sheet changes that they don't want to be here long term and plan to sell the team before long.
I think that MSE may have provided some/all of these items that are "deal breakers" to the NBA and the City/NBA (in their negotiations) decided that they were not going to fly. I think the NBA told MSE that the term sheet (as voted on by the City) was a negotiated final term sheet but MSE may not have liked that these terms were stricken. I don't know why MSE then agreed to the term sheet in Orlando, unless it was just for PR and to keep fans coming to the arena for the rest of this season (until the NBA BOG meeting). They then "resurrected" the "disputed" terms in order to sink the deal because they still want to move to Anaheim and don't want to commit to Sacramento. You can see by the MSE-requested term sheet changes that they don't want to be here long term and plan to sell the team before long.
This is a shortened version of what many people have been trying to say. My shorter version is that they are broke.
Why not say it, find a buyer, and go out with some semblance of honor. As of now they as a group have chosen the least liked of their family to represent them and will go out being disliked. This will hurt them in future endeavors.
Why not say it, find a buyer, and go out with some semblance of honor. As of now they as a group have chosen the least liked of their family to represent them and will go out being disliked. This will hurt them in future endeavors.
The Maloofs would never say they're "broke" - admiting humiliating failure of a lost empire that mostly George Maloof, Sr. built into prominance. The "Kings are not for sale," is not the same we will absolutely never sell. Maybe they are exploring possible sale or offers discretely and confidentially - how would we as Kings fans know - we wouldn't. I think Maloofs know a PR war between them and the city plus getting sponsors and customers against them - is a losing proposition. How they get out of the current bad blood I don't know but I think they'll do something - even if it's just "cooling off" for a period of time as David Stern now advises. One thing they could do positive, even boldly, is dispatch George Maloof, Jr. back to Vegas and let Joe, Gavin or Phil take over the lead going forward.
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They may not have paid the tax but that's why I prefaced by saying "over or close". They've definitely been close during the early days of the decline. They completely bottomed out on the floor in 08-09 but you'd be surprised how high the payroll was. They had to trade Bibby to Atlanta in exchange for expiring deals during the previous season to avoid paying the tax for 08-09.
Don't get me wrong. I agree that the $100 million they took out was definitely towards the Palms or something else. I've made it clear on this board that the Maloofs and other owners overstate their losses to a ridiculous level.
Here's what I'm confused about though. We agree that they weren't losing that much money on the Kings so if the a good chunk of the $100 million was for the Palms, then how in the world did they drop to 2% owners? Are they that stupid or was their profit level so low that a majority of the $100 million was used to pay off the revolver. If that's the case then they're even worse businessmen than I thought.
Don't get me wrong. I agree that the $100 million they took out was definitely towards the Palms or something else. I've made it clear on this board that the Maloofs and other owners overstate their losses to a ridiculous level.
Here's what I'm confused about though. We agree that they weren't losing that much money on the Kings so if the a good chunk of the $100 million was for the Palms, then how in the world did they drop to 2% owners? Are they that stupid or was their profit level so low that a majority of the $100 million was used to pay off the revolver. If that's the case then they're even worse businessmen than I thought.
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This is what I don't understand. If they plan on selling the team, why screw over the fans in the process. The least they could do is sell to someone like Burkle and then they can at least look themselves in the mirror since he'll keep the team here.
Selling to an outsider makes no sense. You lose your team AND you screw over a bunch of fans on the way out. Samueli has said time and time again that he doesn't want to buy a team outright but just wants a team for his building. That's why the Anaheim terms are written up like that. He wants to inherit the team on the cheap.
If the Maloofs want to sell outright, I would think that Burkle would be their best bet for a large payday. I can't see Hansen in Seattle paying as much since he has to spend $290 of his own money on a Seattle arena. Burkle would only be paying $75 million that the league would be fronting to him.
Selling to an outsider makes no sense. You lose your team AND you screw over a bunch of fans on the way out. Samueli has said time and time again that he doesn't want to buy a team outright but just wants a team for his building. That's why the Anaheim terms are written up like that. He wants to inherit the team on the cheap.
If the Maloofs want to sell outright, I would think that Burkle would be their best bet for a large payday. I can't see Hansen in Seattle paying as much since he has to spend $290 of his own money on a Seattle arena. Burkle would only be paying $75 million that the league would be fronting to him.
The reason why they would be looking to sell to Samueli is because they obviously have some other deal with him related to their other business ventures. They must have something in the works with Samueli that is outside the NBA and very much to do with their Palms or other struggling business venture.
Why else would they agree to the terms with Anaheim in which they obviously get a worse deal than they would in Sacramento's new arena (other than they don't have the money) and request all those changes to the framework of the deal with Sacramento and AEG. You know the "new owner can pull out of the deal at any time" Shorter lease that can be broken", etc... it stinks of the backdoor deal with Samueli.
I think Maloofs are stuck between a rock and a hard place, they could very well be boxed in the corner with their under the table dealings with Samueli and boxed into the Sacramento market by the NBA. They will crumble soon enough. We just need to be patient and put up with their crap for some time which is not easy but this thing will get resolved.
Why else would they agree to the terms with Anaheim in which they obviously get a worse deal than they would in Sacramento's new arena (other than they don't have the money) and request all those changes to the framework of the deal with Sacramento and AEG. You know the "new owner can pull out of the deal at any time" Shorter lease that can be broken", etc... it stinks of the backdoor deal with Samueli.
I think Maloofs are stuck between a rock and a hard place, they could very well be boxed in the corner with their under the table dealings with Samueli and boxed into the Sacramento market by the NBA. They will crumble soon enough. We just need to be patient and put up with their crap for some time which is not easy but this thing will get resolved.