First right of refusal - latest rumors, etc.

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Tetsujin

Tetsujin

The Game Thread Dude
#96
#96
Carmichael Dave had an attorney look at a minority owner contract. All signs point towards a minority owner being able to match.

Coincidentally, the specific clause in question was made originally so the Maloofs could acquire more of the team whenever a portion went on sale.
 
VF21

VF21

Super Moderator Emeritus
SME
#97
#97
Here's the Twitter exchange: (You have to read from the bottom up)

Michael McCann ‏@McCannSportsLaw

@RealMurphdog916 I'm nearly certain they knew about this clause - they are smart and have good lawyers - but probably don't see it as threat
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5m Michael McCann Michael McCann ‏@McCannSportsLaw

@SactoKingsFan @CarmichaelDave Thanks! I'll be on his show at 9:15 am Pacific Friday morning to discuss this. Probably going to sleep soon.
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8m Michael McCann Michael McCann ‏@McCannSportsLaw

@lildeac2 I'm in New Hampshire and I watch a lot of Celtics games - I don't have a rooting interest in this dispute. Just trying to be fair.
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10m Michael McCann Michael McCann ‏@McCannSportsLaw

@916_Fanatic_CB Yes, there is a contractual obligation to provide "Transfer Notice" to other owners of intent to sell equity to third-party.
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14m Michael McCann Michael McCann ‏@McCannSportsLaw

@AmadorNante Hansen suing NBA if this falls through is possible but if he ever wants to own an NBA team - or an NFL/MLB/NHL team - he won't.
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16m Michael McCann Michael McCann ‏@McCannSportsLaw

@jdcarter625 @jwwalter1 @CarmichaelDave I don't see a time limit, so presumption would be a "reasonable" one.
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20m Michael McCann Michael McCann ‏@McCannSportsLaw

@RPaulRogers Timing would matter there - can they match majority share before they decline to match Hansen buying minority? More litigation!
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22m Michael McCann Michael McCann ‏@McCannSportsLaw

@EricRutty Would really depend on whether that minority owner has $ and desire to match; if they do, odds of blocking sale seem good.
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23m Michael McCann Michael McCann ‏@McCannSportsLaw

@RPaulRogers Might but minority owners could decline to match minority share being sold but match majority = keep team, Hansen gets minority
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25m Michael McCann Michael McCann ‏@McCannSportsLaw

@jwwalter1 @CarmichaelDave More or less, but it's worded as a Transfer Notice - basically telling other owners we're selling, you can match.
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28m Michael McCann Michael McCann ‏@McCannSportsLaw

@SactoKingsFan @CrownDowntown If it goes to litigation, that would make Kings playing in Seattle in 13-14 much less likely. Clock is ticking
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29m Michael McCann Michael McCann ‏@McCannSportsLaw

@Brando817Halien No, they minority owners can group together to come up with the $ (but still a ton of money and not clear they can/want to)
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30m Michael McCann Michael McCann ‏@McCannSportsLaw

@CrownDowntown They would have to match what Hansen/Ballmer are paying, and NBA debt limits mean they can't borrow it all.
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31m Michael McCann Michael McCann ‏@McCannSportsLaw

@PolishLogic @CarmichaelDave Maybe, but wording in contract did not (intentionally or not) distinguish majority v minority owners there.
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33m Michael McCann Michael McCann ‏@McCannSportsLaw

@EricRutty @CrownDowntown I don't think it would take injunction - if they have the $ + desire, the contract I saw indicates they can match.
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37m Michael McCann Michael McCann ‏@McCannSportsLaw

@jeffbradway @caseyc8 @CarmichaelDave Minority owners would buy in proportion to their stake "or as they shall otherwise agree".
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37m Michael McCann Michael McCann ‏@McCannSportsLaw

@CrownDowntown It's good for Sacramento but requires minority owners to have alot of $ + unclear from contract if Maloofs can pull back sale
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44m Michael McCann Michael McCann ‏@McCannSportsLaw

@SteilacoomHawks They may not see it as threat - can minority owners come up with all that money (& can't borrow it due to NBA debt limits).
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48m Michael McCann Michael McCann ‏@McCannSportsLaw

@caseyc8 @CarmichaelDave They have right to match only the partnership interests being sold.
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49m Michael McCann Michael McCann ‏@McCannSportsLaw

@ksmith1984 @VitisVinifera2 @CarmichaelDave Great pt-that's true. NBA has limits on allowable debt. Could prevent minority owners from match
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51m Michael McCann Michael McCann ‏@McCannSportsLaw

@ed_m7 @CarmichaelDave Contract doesn't directly say Maloofs would be forced to accept match, but wording implies that. Would be litigated.
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53m Michael McCann Michael McCann ‏@McCannSportsLaw

@VitisVinifera2 @CarmichaelDave Contract doesn't expressly address that, but I don't see anything saying they can't borrow money to match.
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54m Michael McCann Michael McCann ‏@McCannSportsLaw

@lawdood @CarmichaelDave If they form a group which includes outside investors & then match, Maloofs could say contract doesn't say they can
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1h Michael McCann Michael McCann ‏@McCannSportsLaw

Thanks to @CarmichaelDave I have read what appears to be #Kings ownership agreement - there is a right to match. See his page for more.
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1h Michael McCann Michael McCann ‏@McCannSportsLaw

@RossMacCallum @richarddeitsch @slmandel Either states' law could apply, but IMO stronger nexus to Cali where Tuiasosopo committed acts.
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1h Michael McCann Michael McCann ‏@McCannSportsLaw

@Dah_knee True but minority owners may try to get that money through borrowing or forming investment groups.
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1h Michael McCann Michael McCann ‏@McCannSportsLaw

@wieslawb Plus, if publishers can get sued for lies in books, then cost of publishers obaining insurance skyrockets - and so do book prices.
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1h Michael McCann Michael McCann ‏@McCannSportsLaw

@wieslawb I don't see this lawsuit going anywhere. Yes, Armstrong was dishonest, but no one buys book with legal right that it is all true.
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1h Michael McCann Michael McCann ‏@McCannSportsLaw

@IrishLoyalSon @slmandel He can try to mitigate it through disarming words like "prank" or "joke" but IMO it was "harassment" and "fraud".
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1h Michael McCann Michael McCann ‏@McCannSportsLaw

@Den_Dunn It seems fairly certain that Te'o can't be the only person who committed a wrong, but if he did, would at least hurt his damages.
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1h Michael McCann Michael McCann ‏@McCannSportsLaw

@ZemragSkrap @jmverlin @richarddeitsch @slmandel Not all about $$ in situation like this. Te'o may obtain sense of justice by winning case.
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2h Michael McCann Michael McCann ‏@McCannSportsLaw

@grahamLIOG I see what you're saying, but O'Meara could argue she's been embarrassed by being implicated in very weird/humiliating story.
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2h Michael McCann Michael McCann ‏@McCannSportsLaw

@maxaiden @richarddeitsch @slmandel Intentional Infliction of Emotional Distress tough to prove - but if ever the right case, Teo's is it.
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2h Michael McCann Michael McCann ‏@McCannSportsLaw

@CarmichaelDave Can you email the minority partner agreement to me at michael.mccann [at] http://law.unh.edu - thanks, much appreciated.
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2h Michael McCann Michael McCann ‏@McCannSportsLaw

@kfippin No, the language shouldn't bar a limited partner from doing that -- but in circumstance of a right to match, different story.
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2h Michael McCann Michael McCann ‏@McCannSportsLaw

@CarmichaelDave It's possible bankruptcy and right to match issues could lead to injunctions. And Johnson knows that - gives him more time.
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2h Michael McCann Michael McCann ‏@McCannSportsLaw

@MorenoS209 @CarmichaelDave Given that Hansen/Ballmer are stophisticated business persons, I can't believe they would done deal w/o remedy.
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2h Michael McCann Michael McCann ‏@McCannSportsLaw

@OldSchoolJoel @ChrisDaniels5 1) If 7% empowers right to match, may block/delay Hansen deal 2) Bankruptcy judge may delay sale to protect 7%
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2h Michael McCann Michael McCann ‏@McCannSportsLaw

@bgpappa @Hoffa777 @CarmichaelDave Along those lines, maybe $30 million is because of uncertainties related to rights of minority owners.
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2h Michael McCann Michael McCann ‏@McCannSportsLaw

@kfippin Probably but would depend on wording of match in Cook's equity in Kings - it may contemplate transfer via bankruptcy auction.
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2h Michael McCann Michael McCann ‏@McCannSportsLaw

@CarmichaelDave I agree with that and overall point that there can't be mystery match clauses - they are too big of a deal to be hidden.
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2h Michael McCann Michael McCann ‏@McCannSportsLaw

@Hoffa777 @CarmichaelDave Maloofs would be obligated to share information related to value of their equity - a match right should go to that
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2h Michael McCann Michael McCann ‏@McCannSportsLaw

@CarmichaelDave That's my understanding too, though I wonder if a minority owner did quick sale to whale group & they match (seems unlikely)
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2h Michael McCann Michael McCann ‏@McCannSportsLaw

@1seahawker @ChrisDaniels5 Since not publicly traded company, no right to see it. Can't use Freedom of Information Act since not govt actor.
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2h Michael McCann Michael McCann ‏@McCannSportsLaw

@benfromedina I think odds are high Kings end up in Seattle, but not 100%. Johnson has influence + talk of NBA expansion could enter story.
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2h Michael McCann Michael McCann ‏@McCannSportsLaw

@MorenoS209 @CarmichaelDave I'd be stunned if Hansen's legal team wasn't aware this clause existed - due dilligence should have revealed it.
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2h Michael McCann Michael McCann ‏@McCannSportsLaw

@kfippin Yes & I'm skeptical there is this clause; but if its there, matching may not bind Maloofs or might allow new offer from Hansen.
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2h Michael McCann Michael McCann ‏@McCannSportsLaw

@CarmichaelDave Depends on wording of match - it might close the transaction or allow new offers (probably the latter for period of days).
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2h Michael McCann Michael McCann ‏@McCannSportsLaw

@CarmichaelDave Yes. Fact that we haven't heard about clause till last week makes me think it's weakly worded.
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2h Michael McCann Michael McCann ‏@McCannSportsLaw

@wfmccullough Charlotte would have to buy back Hornets name and IP from Tom Benson. I've heard $3 million as a purchase price.
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2h Michael McCann Michael McCann ‏@McCannSportsLaw

@WolfmanJake66 My understanding is 1 is a family; other 3 are individuals. The whale buy idea may not be possible, but it's intruiging idea.
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2h Michael McCann Michael McCann ‏@McCannSportsLaw

On "right of first refusal" for #Kings minority owners: big difference between Maloofs having to accept match or only having to consider it.
 
J

Jose

Bench
#100
#100
Kingster said:
Anything wrong with having multiple whale offers? As long as they contractually promise to stay in Sacto, does it make a difference?
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Don't want to get into a bidding war... ideally, it's a united group with a single offer. Don't want to jack up the price and give the clowns more $$$.
 
whozit

whozit

Starter
#101
#101
LWP777 said:
No new news this morning? I expected to see a lot more to this thread. No news is good news?
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TheCDnetworks had a good show this morning. CD explained how Burkle is doing due diligence and if he is announced CD's opinion is that it's game over. Sacramento would either keep the Kings or get an expansion team. I would take the former, the latter would do nothing for me (being gone from Sac county for so long, I wouldn't have any connection with a "new" team).

Michael McCann was on and had a good breakdown on the right of first refusal. My interpretation of what he said was it wasn't as big a game changer as was initially hoped. He gave the odds still in Seattle's favor.
 
whozit

whozit

Starter
#102
#102
Jose said:
Don't want to get into a bidding war... ideally, it's a united group with a single offer. Don't want to jack up the price and give the clowns more $$$.
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Yes, but if you can show that multiple "whales" view the market as viable it is ammunition on why the team should not be allowed to be sold
AND moved.
 
Section 101

Section 101

All-Star
#103
#103
Interesting new twist according to RE.

R.E. Graswich ‏@REGraswich

City of Sac's $25m piece of Kings (plus note on arena and 86 surrounding acres) was designed for behavior just like M's.

R.E. Graswich ‏@REGraswich

Another Kings fun fact: city of Sac holds $25m position in team. Not LP but loan collateral. More gear sand for clever lawyer.
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So according to this the City already owns the $25 million share. We've seen the bonds docs and it did show the city owning the arena and land that is being leased back.

Now it would be really good if the city turns that $25 mil into 1997 dollars value of the team and gets a bump to todays value.
 
J

Jose

Bench
#104
#104
whozit said:
Yes, but if you can show that multiple "whales" view the market as viable it is ammunition on why the team should not be allowed to be sold
AND moved.
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Well, if you can show multiple similar offers (same $$) from different "whales"/ownership groups to demonstrate that there are multiple buyers that consider this a very viable market, then yes. What you don't want is 3 groups bidding against each other jacking up the price.
 
J

Jose

Bench
#105
#105
Section 101 said:
Interesting new twist according to RE.
We've seen the bonds docs and it did show the city owning the arena and land that is being leased back.
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I don't like this... Could give the Maloofs room to say "fine, we're staying", default on the loan and tell the city to take the arena (collateral) as partial payment. THEN sabotage any deals to lease the arena from the city and go to the NBA, ask for relocation because they don't have a place to play at. Especially with the current team valuation at $525M, even if they forfeit $25M against the loan they would still be majority owners.
 
Bricklayer

Bricklayer

Don't Make Me Use The Bat
#106
#106
Jose said:
Well, if you can show multiple similar offers (same $$) from different "whales"/ownership groups to demonstrate that there are multiple buyers that consider this a very viable market, then yes. What you don't want is 3 groups bidding against each other jacking up the price.
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You remain overconcerend wiht the Maloofs methinks.

But regardless, you want to presnt the BOG with as clean a choice as possible. no specualtion, no "plans". You want ot walk in and say here it he arean, it IS being buil, you've already seen the specs. its done. HERE is the investor. he's already in. Willing to sign tommorow. It IS being done. Just give us the greenlight and we're good.

You don't want to give the BOG wiggle room or leave room for uncertainty.
 
Bricklayer

Bricklayer

Don't Make Me Use The Bat
#107
#107
Jose said:
I don't like this... Could give the Maloofs room to say "fine, we're staying", default on the loan and tell the city to take the arena (collateral) as partial payment. THEN sabotage any deals to lease the arena from the city and go to the NBA, ask for relocation because they don't have a place to play at. Especially with the current team valuation at $525M, even if they forfeit $25M against the loan they would still be majority owners.
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No, again you are overfocused on the Maloofs. The NBA ins't going to mess with them anymore. Nor do they have areason to wnat to create that mess. They want their money.
 
whozit

whozit

Starter
#108
#108
Jose said:
I don't like this... Could give the Maloofs room to say "fine, we're staying", default on the loan and tell the city to take the arena (collateral) as partial payment. THEN sabotage any deals to lease the arena from the city and go to the NBA, ask for relocation because they don't have a place to play at. Especially with the current team valuation at $525M, even if they forfeit $25M against the loan they would still be majority owners.
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That would require the League to be OK with the team defaulting on the loan from the City. I can see the League allowing the team to move but I can't see them allowing the team to renege on a financial commitment. It would essentially force the team to remain another year and they already made a cash call recently. Could they afford another year with minimum salary going up? Miss payroll or something similar (don't know about loan payments) and would that give grounds for the League to take over the team? I think they would seal their fate even more than they already have.
 
J

Jose

Bench
#109
#109
Bricklayer said:
No, again you are overfocused on the Maloofs. The NBA ins't going to mess with them anymore. Nor do they have areason to wnat to create that mess. They want their money.
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You seem to think that they've pretty much told the NBA "we've sold the team" and that the NBA can tell them "sure, but not to the Seattle group, here's a matching Sacramento offer that you're taking" and that they would say "OK".

I wish and hope that it turns out that way, but I think they're petty, vindictive @$$3$ who have screwed the city and fans at every possible opportunity and see no reason why they wouldn't try do it again.

BUT... I do have some hope in that I trust KJ will continue to put up a hell of a fight, and that the NBA is getting tired of the Clowns' shennanigans and will at some point put a stop to them and tell them they're done and take over the sale negotiations, much like they did with the arena.
 
funkykingston

funkykingston

Super Moderator
Staff member
#111
#111
Jose said:
I don't like this... Could give the Maloofs room to say "fine, we're staying", default on the loan and tell the city to take the arena (collateral) as partial payment. THEN sabotage any deals to lease the arena from the city and go to the NBA, ask for relocation because they don't have a place to play at. Especially with the current team valuation at $525M, even if they forfeit $25M against the loan they would still be majority owners.
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Not going to happen. The Maloofs would never do it and the NBA would never allow it.

The Maloofs have agreed to a binding offer with Hansen. They ARE selling the team. The only question is whether it will be to the Seattle group or one who wants to keep the team in town.

And considering they have agreed to those terms I don't see why they wouldn't take a matching offer from Sacramento if the BOG recommends it. It would be the same money either way. I can't imagine them being that petty and vindictive. Besides, if the BOG doesn't approve the sale to Hansen/Ballmer, the only real option would be selling to the Sacramento group or remaining the majority owners and returning to a market that you've now poisoned.
 
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Capt. Factorial

Capt. Factorial

trifolium contra tempestatem subrigere certum est
Staff member
#112
#112
Jose said:
THEN sabotage any deals to lease the arena from the city and go to the NBA, ask for relocation because they don't have a place to play at.
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This is so silly, even the Maloofs couldn't think it would work.

City: Well, now that you've defaulted on STA and we own it, let's get a lease signed for next year.
George: OK, how about $1?
City: I'm afraid that's not going to cut it.
George: You're impossible to work with! Sacramento won't let us play in their arena! We need to move to Anaheim!
NBA BOG: You again? Seriously?

The simple way to look at the whole thing is like this.
1. The Maloofs are selling. They are out. They need the money (perhaps to try to buy back into the Palms), and they can't afford to sink cash into a team that's currently losing money any longer than necessary.
2. The Maloofs are trying to sell to Hansen's group without giving Sacramento a chance because they are vindictive jerks who didn't like it when KJ ruined their plans to move to Anaheim, which would have allowed them to sell the franchise for even more than they're selling it for now. They don't like that KJ went in front of the BOG, showed them up, and detailed how they had been sandbagging the team in order to make a case that Sacramento wasn't profitable.
3. But, see #1.
4. Sacramento is not going gently into that good night. Sacramento has potentially three avenues whereby they can hope to nullify the Hansen agreement.
4A. The NBA BOG has to approve the sale to the Hansen group. Due to Sacramento coming up solidly in NBA-requested arena efforts (amongst other reasons) the NBA may well reject the Hansen deal. And they might take a while in doing it.
4B. The minority owners' contractual right of first refusal appears to have been violated by the Maloofs. The minority owners want the team to stay in Sacramento, and can tie the sale up in the courts, whether or not they can actually make the purchase.
4C. The city's $25M stake in the franchise may also be a stumbling block for the Maloofs to sell the franchise without consent.
5. All of the scenarios in #4, while they might ultimately fail to prevent a sale to the Hansen group, will certainly DELAY a sale to the Hansen, possibly tying it up in courts for years.
6. As an alternative to tying the sale up for years in the courts, KJ is going to be presenting an alternate ownership group who will (presumably) match the Hansen offer and keep the team in Sacramento. The NBA BOG, minority owners, and city will consent to this sale and not tie it up for years in the courts.
7. Thus, the Maloofs will succeed in accomplishing #1, the sale, much more quickly if they just give up on #2. They may even have no choice at all given their financial situation.
8. Hansen may not be happy, but to avoid anything dragging out further, the NBA will offer him an expansion franchise as long as he plays nice.
9. Everybody wins, except for the Maloofs who don't get their vengeance.

This looks to be the most plausible way the whole thing plays out right now, at least to me. That relies on the assumption that to the Maloofs, selling to SOMEBODY is more important than vengeance. And I think it's a pretty good assumption. Nice try at screwing us, guys, but it doesn't look like it's going to work. As Marcellus Wallace said: "You leave town tonight, right now. And when you're gone, you stay gone, or you be gone. You lost all your Sacramento privileges. Deal?"
 
macadocious

macadocious

Starter
#114
#114
Capt. Factorial said:
This is so silly, even the Maloofs couldn't think it would work.

City: Well, now that you've defaulted on STA and we own it, let's get a lease signed for next year.
George: OK, how about $1?
City: I'm afraid that's not going to cut it.
George: You're impossible to work with! Sacramento won't let us play in their arena! We need to move to Anaheim!
NBA BOG: You again? Seriously?

The simple way to look at the whole thing is like this.
1. The Maloofs are selling. They are out. They need the money (perhaps to try to buy back into the Palms), and they can't afford to sink cash into a team that's currently losing money any longer than necessary.
2. The Maloofs are trying to sell to Hansen's group without giving Sacramento a chance because they are vindictive jerks who didn't like it when KJ ruined their plans to move to Anaheim, which would have allowed them to sell the franchise for even more than they're selling it for now. They don't like that KJ went in front of the BOG, showed them up, and detailed how they had been sandbagging the team in order to make a case that Sacramento wasn't profitable.
3. But, see #1.
4. Sacramento is not going gently into that good night. Sacramento has potentially three avenues whereby they can hope to nullify the Hansen agreement.
4A. The NBA BOG has to approve the sale to the Hansen group. Due to Sacramento coming up solidly in NBA-requested arena efforts (amongst other reasons) the NBA may well reject the Hansen deal. And they might take a while in doing it.
4B. The minority owners' contractual right of first refusal appears to have been violated by the Maloofs. The minority owners want the team to stay in Sacramento, and can tie the sale up in the courts, whether or not they can actually make the purchase.
4C. The city's $25M stake in the franchise may also be a stumbling block for the Maloofs to sell the franchise without consent.
5. All of the scenarios in #4, while they might ultimately fail to prevent a sale to the Hansen group, will certainly DELAY a sale to the Hansen, possibly tying it up in courts for years.
6. As an alternative to tying the sale up for years in the courts, KJ is going to be presenting an alternate ownership group who will (presumably) match the Hansen offer and keep the team in Sacramento. The NBA BOG, minority owners, and city will consent to this sale and not tie it up for years in the courts.
7. Thus, the Maloofs will succeed in accomplishing #1, the sale, much more quickly if they just give up on #2. They may even have no choice at all given their financial situation.
8. Hansen may not be happy, but to avoid anything dragging out further, the NBA will offer him an expansion franchise as long as he plays nice.
9. Everybody wins, except for the Maloofs who don't get their vengeance.

This looks to be the most plausible way the whole thing plays out right now, at least to me. That relies on the assumption that to the Maloofs, selling to SOMEBODY is more important than vengeance. And I think it's a pretty good assumption. Nice try at screwing us, guys, but it doesn't look like it's going to work. As Marcellus Wallace said: "You leave town tonight, right now. And when you're gone, you stay gone, or you be gone. You lost all your Sacramento privileges. Deal?"
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I think this post should be the start of a new thread. It's exactly what I have been thinking especially that last 24 hours as a lot of this news has come to fruition.

If everyone were to see this and read this it would really stop a lot of the nonsensical posts.
 
L

Livinthedream

All-Star
#116
#116
macadocious said:
I think this post should be the start of a new thread. It's exactly what I have been thinking especially that last 24 hours as a lot of this news has come to fruition.

If everyone were to see this and read this it would really stop a lot of the nonsensical posts.
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Ha! Nothing can stop the nonsensical posts. People are too emotional right now and not seeing the big picture.
 
Rockmeister

Rockmeister

All-Star
#118
#118
Livinthedream said:
I think it's just a courtesy meeting setup up by a minority owner. It' too late in the game for Ellison to come in now. KJ is trying finalize the deal and release his whale by next week. Bringing in Ellison would mean starting over. KJ is courting Burkle.
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Where does it say it is too late for Ellison to come in?
 
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