Another Seattle perspective
- Thread starter Trueblood
- Start date
I am not "connected" at all. Having said that, I would be shocked if the Maloofs were not seriously shopping for other cities. I don't need rumors. What else could insiders tell me that I don't already know. The Maloofs will be taking the Kings elsewhere in the near future. I could care less where they go if they are not here. I am just enjoying the Kings final 1-2 seasons in Sacramento at this point.
Once they leave, I will be done with them and the NBA.
As far as Sactown goes, it should be "Royally" embarrassed that it is getting shown-up by the likes of Kansas City, Omaha and, yes, Louisville.
Once they leave, I will be done with them and the NBA.
As far as Sactown goes, it should be "Royally" embarrassed that it is getting shown-up by the likes of Kansas City, Omaha and, yes, Louisville.
Mostly gotta go with this. Am I curious? Yes. Does it matter, really? No. There can't be many of us that don't know the Kings will be moving and maybe as soon as next season, if no arena deal can be worked out in short order. I'm quite sure the Maloofs have been and continue to look around for what's best for the financial bottom line. What business person wouldn't? I keep holding on to slim hope, until a request to move is actually announced.
So while I'm curious, I really don't care a flyin' you-know-what where they go. They won't be here and it will break my heart.
So while I'm curious, I really don't care a flyin' you-know-what where they go. They won't be here and it will break my heart.
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There remains a gulf between knowing the Maloofs are doing their due diligence, and in KNOWING the deal is done and KNOWING where its done too. The latter is a big claim. Possible perhaps. And if Jerry Reynolds is the source you gotta say uh-oh. But if its a member fo the independent media that's a big claim.
Respectfully, no I can't. Please know that I'm a Kings fan just like the rest of you. I've probably said too much already. I was just so disgusted when I heard the latest crap floating around, that I needed to vent a little. I'm hoping for a miracle,and yes, they do still happen! Bottom line, I'm choosing to believe that my Kings are staying right here!!
I would think it would be good to get their future destination out in the open if one exists if only because it might serve as a wakeup call to those who have convinced themselves that Arco is still viable and that this is just some game of who blinks first and ultimately the Maloofs will give in. If someone in the media knows unless they want the team gone they should leak it if they can't go public.
In trying reading the tea leaves, have the Maloofs comes out and given Sacramento the public "We are committed to saying here." They did that after the other arena failures and when the debt issue hit the fan this year.
After the NBA said there was no hope for an arena and the contraction story broke, I saw the Maloofs say "We won't be contracted," but that was it. Have they really said much since the brief expo blurb, other than we are just focused on filling the place up and this seaon? In particular, post Stern's comments re lost hope?
Not trying to stir the pot, I'm thinking that I might have just missed it. Did anybody see anything like before?
After the NBA said there was no hope for an arena and the contraction story broke, I saw the Maloofs say "We won't be contracted," but that was it. Have they really said much since the brief expo blurb, other than we are just focused on filling the place up and this seaon? In particular, post Stern's comments re lost hope?
Not trying to stir the pot, I'm thinking that I might have just missed it. Did anybody see anything like before?
The problem, I believe, is two-fold:
1) The voting public has rejected and will continue to reject a public-funding option. I've said all along, there's a canyon we have to build a bridge over, with the general public willing to fund up to some percentage, and the Maloofs willing to put up some percentage, but the numbers are so far apart that they just can't build a bridge over that canyon.
2) The Maloofs' hands are being forced by their own financial problems. The clock has already run out. They needed to build the bridge over that canyon about 2 years ago. Too late; here comes the flood.
My only question is, Did they find a buyer, or will the league decide to own the team, much like MLB did with the Montreal Expos? Because that's where we are right now. The Sacramento Expos. Gee, the name even kind of fits. If the league is buying it, that gets around the relocation fee problem. San Jose?
1) The voting public has rejected and will continue to reject a public-funding option. I've said all along, there's a canyon we have to build a bridge over, with the general public willing to fund up to some percentage, and the Maloofs willing to put up some percentage, but the numbers are so far apart that they just can't build a bridge over that canyon.
2) The Maloofs' hands are being forced by their own financial problems. The clock has already run out. They needed to build the bridge over that canyon about 2 years ago. Too late; here comes the flood.
My only question is, Did they find a buyer, or will the league decide to own the team, much like MLB did with the Montreal Expos? Because that's where we are right now. The Sacramento Expos. Gee, the name even kind of fits. If the league is buying it, that gets around the relocation fee problem. San Jose?
The voters rejected a sales tax. Did they reject anything else? Because I think there are many (myself included though I am a non-resident) who would have accepted virtually any other tax than a sales tax, its just not a popular form of taxation for many reasons. Not to mention that even if those two measures passed they would have had to jump through all kinds of judicial hoops before the arena got built.
Also why would you think the Maloofs wouldn't keep the team after moving to another market? They seem to genuinely enjoy the ownership and they also use it to market the other family business. If they got a sweetheart deal from another city all the more reason to keep the team.
Also why would you think the Maloofs wouldn't keep the team after moving to another market? They seem to genuinely enjoy the ownership and they also use it to market the other family business. If they got a sweetheart deal from another city all the more reason to keep the team.
I don’t think he’s saying the public won’t fund a portion. Merely, that the public probably won’t fund most of the project and certainly won’t fund all of it.
Let’s say the city chipped in their land and KJ somehow got the city council to scrape together 100 million in some fashion that didn’t require a public vote, and they could squeeze the cost down to 400 million. And really, those would be huge stretches, the cannon referred to in his post is still $300 million. Lately, the Maloofs have been talking about mostly/only? rent. I say only because $300 million up front would probably get this built. $300 in rent probably means nothing gets done. $300 million is nothing to sneeze at, but when they would pay it will make all the difference in the world .
Let’s say the city chipped in their land and KJ somehow got the city council to scrape together 100 million in some fashion that didn’t require a public vote, and they could squeeze the cost down to 400 million. And really, those would be huge stretches, the cannon referred to in his post is still $300 million. Lately, the Maloofs have been talking about mostly/only? rent. I say only because $300 million up front would probably get this built. $300 in rent probably means nothing gets done. $300 million is nothing to sneeze at, but when they would pay it will make all the difference in the world .
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you can cross Ballmer and Seattle off the list of potential suitors , this is good news. http://www.bizjournals.com/sacramento/news/2010/11/08/microsofts-ballmer-buying-the-kings.htm.
From the Horses mouth, Maloofs says Kings not for sale and have never even spoke with Ballmer.
From the Horses mouth, Maloofs says Kings not for sale and have never even spoke with Ballmer.
I don't doubt the report, because if the Maloofs can hold the team they will keep it.
(At this point, you could play with the numbers and make an argument either way.)
However, I take issue with the argument of - The owners said X, thus X is no longer up for dispute. If this is the last season, if they tip their hand too early it costs them tens of millions of dollars.
For example, if you watched the ESPN movie on the Colts move, papa Ersay gets caught by the press at the airpot and flat out says, "I've never talked to Arizona about moving my team there." And a few days later, Arizona pulled out of the bidding for the team and said so publicly.
The Maloofs are good people and they don't want to lie. When you are looking at: (1) telling a lie for a few months to cover a deal, in order to save millions, knowing the truth will come out, and the people really won't like you much or less in the old city based upon the lie; or (2) letting the deal die or flushing millions down the drain. It happens.
These are the same people that said "It just seemed like a good time to sell the beer business, no money problem." And later, it was reported that they had to sell the beer to refi the Palms.
At this point, I wouldn't take Seattle of the list. I'm not sure you can take Ballmer off, but I don't doubt the Maloofs at this point on that issue.
(At this point, you could play with the numbers and make an argument either way.)
However, I take issue with the argument of - The owners said X, thus X is no longer up for dispute. If this is the last season, if they tip their hand too early it costs them tens of millions of dollars.
For example, if you watched the ESPN movie on the Colts move, papa Ersay gets caught by the press at the airpot and flat out says, "I've never talked to Arizona about moving my team there." And a few days later, Arizona pulled out of the bidding for the team and said so publicly.
The Maloofs are good people and they don't want to lie. When you are looking at: (1) telling a lie for a few months to cover a deal, in order to save millions, knowing the truth will come out, and the people really won't like you much or less in the old city based upon the lie; or (2) letting the deal die or flushing millions down the drain. It happens.
These are the same people that said "It just seemed like a good time to sell the beer business, no money problem." And later, it was reported that they had to sell the beer to refi the Palms.
At this point, I wouldn't take Seattle of the list. I'm not sure you can take Ballmer off, but I don't doubt the Maloofs at this point on that issue.
If the team moves I think the Maloofs would stay owners even if it meant bankrupting the Palms. If they were selling they would have tried to do it this year if the capital gains tax goes to 20% as scheduled next year that is millions left on the table. They like the glamour of owning a team and know that they only become available once every 20 years or so. They may not get a third chance.
I don’t think so. Per the Bee, the Maloofs own controlling interest at 43%. When they took majority ownership, the team was valued at $247 million. Forbes values it now at $305. Let’s say they could get $350 and the city to take over Arco and get out from under the arena loan. They cash in some equity and walk away with $150 million.
It was reported the Beer sold for $100 million. In the bee story three weeks ago, it said “more than 100 million.”
The issue is the $350 revolver on the Palms due in March.
Thus, they could knock down most of the remaining Palms debt, refi and pay off the remainder, and own it outright.
Or, as you say, they could keep the Kings at the expense of the Palms.
They’ve spent at least $865 million on it. $265 to open and $600 expansion. Harrahs has/is trying to buy up the debt that owns the market. If they defaulted, they would not only face a public and hostile takeover buy a business rival. But the press associated with the failure/takeover would further damage/kill the business. With the value already in free fall, it could wipe out any equity they have.
I’m no business man. But if I had to give up an asset I loved for a small profit to save my biggest business, I’d do it. I wouldn’t set most of my family’s assets on fire to own a sports team that I couldn’t afford to run properly, and thus, I would also have to later sell.
Weren't you reporting that the Palms was estimated to be less than 20% of its original value? Maybe even far less? So even if they spent 800 million on it its only worth 200 million or less today. Would you sink $350 million more to save an asset worth half that? There's no equity at all for them right now based on numbers you were touting over the summer. Or would you cut your losses, declare bankruptcy and walk away if you have to? Or more likely with that much money at stake get the debt restructured again and hope that Vegas rebounds?
While Joe and Gavin love running the Kings, I don't think the entire family lets the Palms go down to keep the team. If push comes to shove and it might, I'd bet the Kings go. Even with the value being so low. Unless its a lost cause, you can't sell at that much of a loss.
If it's so bad that they should simply walk away from the Palms, they would be among the "poorest" owners in pro sports. They would have the Kings and their Wells Fargo stock, which would be the base they wouldn't touch to run the Kings.
They would be worth about 35% of their 2002 wealth.
If it gets to that point, you don't want them as owners. We would be run like the 2006-2008 Bobcats on the cheap.
If it's so bad that they should simply walk away from the Palms, they would be among the "poorest" owners in pro sports. They would have the Kings and their Wells Fargo stock, which would be the base they wouldn't touch to run the Kings.
They would be worth about 35% of their 2002 wealth.
If it gets to that point, you don't want them as owners. We would be run like the 2006-2008 Bobcats on the cheap.
While I had "fun" (not really, but you get the point) reading an apparently endless thread about Steve Ballmer, I think we have exactly one fact on which far too much speculation has been built: Steve Ballmer sold $2B in stocks. That's it; that's all we have.
The fact that he's from Seattle is what's making people freak out here. You should go to SonicsCentral and read their thread on it. It'll take you a good hour to get through it.
I do think the combination of our taxpayers expressing a strong desire to not publicly fund an arena and the Maloofs' shaky finances is not a good one. As for which business they would "save", between the Palms and the Kings, I'm sorry, but the Kings lose.
Ballmer and Seattle is a great fit, and Ballmer has the money, and the Maloofs would definitely throw the Kings off to save the Palms, but even this is speculation, speculation and speculation. And by the way, it makes sense that the Maloofs are denying this. As pointed out, what would that do for future ticket sales around here? What, losing $2M isn't bad enough? Should we admit we're on the way out and go ahead and lose $12M? Hmm, probably not.
We have pieces of a jigsaw puzzle, but aren't sure if the final product is the Grand Canyon or a Porsche racing car. We just can't tell from the corners and edges we've isolated.
Speculation that started on one blog and then spread to another, with circular citations... Yeah, not very solid (even if there does appear to be a fair fit so far).
The fact that he's from Seattle is what's making people freak out here. You should go to SonicsCentral and read their thread on it. It'll take you a good hour to get through it.
I do think the combination of our taxpayers expressing a strong desire to not publicly fund an arena and the Maloofs' shaky finances is not a good one. As for which business they would "save", between the Palms and the Kings, I'm sorry, but the Kings lose.
Ballmer and Seattle is a great fit, and Ballmer has the money, and the Maloofs would definitely throw the Kings off to save the Palms, but even this is speculation, speculation and speculation. And by the way, it makes sense that the Maloofs are denying this. As pointed out, what would that do for future ticket sales around here? What, losing $2M isn't bad enough? Should we admit we're on the way out and go ahead and lose $12M? Hmm, probably not.
We have pieces of a jigsaw puzzle, but aren't sure if the final product is the Grand Canyon or a Porsche racing car. We just can't tell from the corners and edges we've isolated.
Speculation that started on one blog and then spread to another, with circular citations... Yeah, not very solid (even if there does appear to be a fair fit so far).
If they are underwater on the Palms right now they already are among the poorest owners in the league. Whether that is good for the Kings or not is irrelevant. Owning an NBA team is about ego and glitz. And I would bet that the very fact that the family owned an NBA team drove a considerable amount of business to the Palms and selling the team would only further sink its value. The fact is NBA teams are extremely hard to come by, just ask Larry Ellison. I am sure he'd pony up $500mil for the Kings right now. Vegas casinos are a dime a dozen. If it came down to one or the other, and I really don't think it will, the choice is obvious.
There is a huge difference between having your largest asset be underwater and operating at a deficit and walking away and writing off your largest investment. You are refusing to acknowledge the difference. You don’t throw away an asset that you’ve invested almost a billion into “because those are a dime a dozen.”
Owing a pro sports team is a lot of fun for very wealthy people. Often you don’t make a profit, but you live off the income from your other businesses and later you cash in on the equity you made by holding the team (where most owners end up making their money in pro sports.) If you love it and can hold it long enough, you might keep it forever as both a family asset and toy.
It’s not as much fun to operate a team if it’s your primary source of income. Accordingly, most of the owners that ran their business that way are long gone.
And how is the route you are proposing – where the Kings have busted, shallow pocketed owner “irrelevant?” If the “saving our money for the right player” mode became the standard operating procedure and the Kings were always in the bottom 10 in payroll it becomes a brutal cycle. The team is bad because they don’t spend, thus they don’t draw, thus they can’t spend. See the A’s as an example.
Larry Ellison wouldn’t have to pay 500 million for the Kings. When bidding for the Ws, he was bidding on a team that already had ties to the Bay Area, a better media market, and a functional arena. If the Maloofs were in a “must sell” spot, he’s bidding on a less valuable team with less bargaining power.
Owing a pro sports team is a lot of fun for very wealthy people. Often you don’t make a profit, but you live off the income from your other businesses and later you cash in on the equity you made by holding the team (where most owners end up making their money in pro sports.) If you love it and can hold it long enough, you might keep it forever as both a family asset and toy.
It’s not as much fun to operate a team if it’s your primary source of income. Accordingly, most of the owners that ran their business that way are long gone.
And how is the route you are proposing – where the Kings have busted, shallow pocketed owner “irrelevant?” If the “saving our money for the right player” mode became the standard operating procedure and the Kings were always in the bottom 10 in payroll it becomes a brutal cycle. The team is bad because they don’t spend, thus they don’t draw, thus they can’t spend. See the A’s as an example.
Larry Ellison wouldn’t have to pay 500 million for the Kings. When bidding for the Ws, he was bidding on a team that already had ties to the Bay Area, a better media market, and a functional arena. If the Maloofs were in a “must sell” spot, he’s bidding on a less valuable team with less bargaining power.
You're ignoring the fact that the billion dollars invested is a sunk cost and its gone now. Making any decision based on that is an emotional rather than a rational decision. If the Maloofs want to run a casino as the centerpiece of their business portfolio at this particular time it would make more sense to bankrupt the Palms and then sell the Kings and start over when the dust settles. And the mere fact that they have bankruptcy as an option is why more than likely that $350 million dollar debt will be restructured in such a way that enables the family to keep both.
And for what its worth, the uncertainty facing the Kings in Sacramento could be considered an assett at the negotiating table if the Kings were up for bid. It opens the team up to buyers looking to move the team to anywhere in the country and those would be owners would be brokering sweetheart deals with their intended municipalities which could initiate a bidding war. The team has a fantastic young core and if they were on the market they'd be pointing to OKC as a model for what the franchise could become.
But again, considering the schedule increase in capital gains tax next year I do think a deal would have already been brewing to get the team sold by December 31st, especially if the sole purpose of the transaction was to bail out the Palms, which was the whole point of my original post.
And for what its worth, the uncertainty facing the Kings in Sacramento could be considered an assett at the negotiating table if the Kings were up for bid. It opens the team up to buyers looking to move the team to anywhere in the country and those would be owners would be brokering sweetheart deals with their intended municipalities which could initiate a bidding war. The team has a fantastic young core and if they were on the market they'd be pointing to OKC as a model for what the franchise could become.
But again, considering the schedule increase in capital gains tax next year I do think a deal would have already been brewing to get the team sold by December 31st, especially if the sole purpose of the transaction was to bail out the Palms, which was the whole point of my original post.
Green Bay Packers excepted. In 1923, they opted to set the team up as a community-owned non-profit. If you ever wondered how a town of 100,000 people hangs on to a sports franchise for 90 years, that's how. The NFL later banned team ownership on that model, but it remains the only successful example of how to keep your team forever.
They won’t do what you proposed and we know that based upon what they did with the beer. They sold, what was at the time, their most profitable business, to shoreup/save the Palms. They knew in December 2009 most of what they know now – both with their numbers and the murky forecast of the U.S. economy. Under your business plan, it would have made sense to cut bait then, live off the beer company, and let the Kings grow in value. They didn’t do that. They carved up their profit center and plowed it into the Palms.
The Palms is not a “sunk cost” and the investment isn’t “gone.” If/when the American economy comes back, it’s one of the top casinos in the country. It should make money year to year and the value will improve. It has the potential to be a successful business, and they own most of it. They made a huge expansion, 600 million, with about 63% of the project financed. Before they could recoup any profit, tourism collapsed. The Palms was hit even harder because they cater to locals. Now the remaining 350 loan is close to the value of the place. It doesn’t have a lot of equity right now, but it’s not worthless. Even if it’s worth zero right now and operates at some deficit, there is a lot of value that can be rehabilitated if they hang on for the rebound. It’s a much larger jump than continuing to hold the Kings where they can already cash out a profit.
Harrahs is already trying to buy up their debet. Which shows there is value in the Palms. If you think they/their partners maintain control and fend off Harrahs by using bankruptcy – you’re kidding yourself. The Palms is different because it’s not a publicly owned corporate place.
Moreover, if you noticed, when Station – a Palms business partner - went into bankruptcy, they listed their shares (which might not include the initial investment from the Fiesta) as an asset. Granted they opened the books and showed that the value when from a lot to almost nothing, but they weren’t claiming the Palms as a liability. Not a sunk cost my friend.
My point has always been that the problems with the Palms puts the Maloofs in a huge cash crunch. Not that their investment in the Palms is “gone.” Both the actions of the Maloofs, their competitors, and partners refute that.
Also, every NBA team solicits national bids for a sale. Your suggestion that a distressed sale with a tight deadline will increase the value is a huge stretch.
The Palms is not a “sunk cost” and the investment isn’t “gone.” If/when the American economy comes back, it’s one of the top casinos in the country. It should make money year to year and the value will improve. It has the potential to be a successful business, and they own most of it. They made a huge expansion, 600 million, with about 63% of the project financed. Before they could recoup any profit, tourism collapsed. The Palms was hit even harder because they cater to locals. Now the remaining 350 loan is close to the value of the place. It doesn’t have a lot of equity right now, but it’s not worthless. Even if it’s worth zero right now and operates at some deficit, there is a lot of value that can be rehabilitated if they hang on for the rebound. It’s a much larger jump than continuing to hold the Kings where they can already cash out a profit.
Harrahs is already trying to buy up their debet. Which shows there is value in the Palms. If you think they/their partners maintain control and fend off Harrahs by using bankruptcy – you’re kidding yourself. The Palms is different because it’s not a publicly owned corporate place.
Moreover, if you noticed, when Station – a Palms business partner - went into bankruptcy, they listed their shares (which might not include the initial investment from the Fiesta) as an asset. Granted they opened the books and showed that the value when from a lot to almost nothing, but they weren’t claiming the Palms as a liability. Not a sunk cost my friend.
My point has always been that the problems with the Palms puts the Maloofs in a huge cash crunch. Not that their investment in the Palms is “gone.” Both the actions of the Maloofs, their competitors, and partners refute that.
Also, every NBA team solicits national bids for a sale. Your suggestion that a distressed sale with a tight deadline will increase the value is a huge stretch.
Maybe. In 1962, Nevada collected 90+% of legal gambling revenues in the US, competing only with a few scattered card rooms, church bingo parlors, and a couple of lottery programs. Ditto in 1978, but things have changed since then. Local card rooms and bingo parlors are still only 6% of the market, but commercial casinos' market share has dropped to under 40%, and Las Vegas ($5.5B) has to split that with Atlantic City ($4B), Chicagoland ($2B), Connecticut (1.5B), Detroit ($1.5B), St. Louis ($1B), Tunica/Lula Mississippi ($1B), Biloxi ($1B) and many other casino sites.
And then there are the other new competitors. The native-run Foxwood Resort Casino in Ledyard, Conn. is now North America's most profitable casino at $1.5B/yr. Native-owned casinos in California represent the fastest growing market sector in the gaming industry, seriously putting the hurt on Nevada. Currently, native-owned gambling establishments are taking in close to $20B/yr., four+ times as much as Vegas is.
There were 2 states with lotteries in the 1960s, now there are 43.
There are a lot of reasons why the Palms may never turn a profit.
And then there are the other new competitors. The native-run Foxwood Resort Casino in Ledyard, Conn. is now North America's most profitable casino at $1.5B/yr. Native-owned casinos in California represent the fastest growing market sector in the gaming industry, seriously putting the hurt on Nevada. Currently, native-owned gambling establishments are taking in close to $20B/yr., four+ times as much as Vegas is.
There were 2 states with lotteries in the 1960s, now there are 43.
There are a lot of reasons why the Palms may never turn a profit.
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