"Best interest of the league" clause

[rainmaker]

Does anyone know anything about this? Voison pointed it out in her article today, which I thought was one of her better articles.

The exit strategy consists of two, possibly three, paths: the high road (Maloofs sell the team to a local interest); the toll road (the NBA owners pressure the Maloofs to sell their mismanaged franchise under the "best interest of the league" clause in the league by-laws); or the most unpredictable, but not implausible, road, with powerhouse Anschutz Entertainment Group (AEG) dipping into its considerable earnings, picking up the $67 million tab for the sake of its civic duty, and saving the day.

This, then, is where the second option in the exit strategy comes in – league intervention. It would be ugly, it would be costly, and it would be unprecedented. But under the "best interest" clause of the by-laws, the other 29 owners could decide that the continued running of the Kings franchise – especially given increased revenue sharing – was a detriment to the league.

Read more here: http://www.sacbee.com/2012/04/29/4450957/ailene-voisin-three-scenarios.html#storylink=cpy

Is this a possibility? I find this very interesting, and wonder if Sterns threat about revenue sharing not being used for what the Maloofs have threatened to use it for(run a bare bones operation and survive on revenue sharing) and that the Kings share could be vetoed by the other owners, goes along with the thought process that the Maloofs don't have the best interest of the league in mind, which might lead to serious ramifications against them by the league/owners.

 

[VF21]

Certainly would explain some of the comments Stern has made recently.

 

[fansinceday1]

Stern would never get ALL the owners to agree to seize the team. The small market teams could easily be in that position sometime in the future. They alone would not agree to that out of self interest.

 

[hrdboild]

What Joe Maloof said earlier about not needing a new arena now because of revenue sharing certainly sets them up for some blowback from the league. I have no doubt a majority of the owners would prefer the Maloofs out of the league at this point and someone who is actually going to contribute to league profits to take their place. It remains to be seen what can legally be done about it, but I'm hopeful. An angered David Stern is typically a good ally to have on your side, and remember he used to be a lawyer himself.

 

[VF21]

Stern would never get ALL the owners to agree to seize the team. The small market teams could easily be in that position sometime in the future. They alone would not agree to that out of self interest.

I disagree. The small market teams who have worked hard to establish themselves might be among the first to want to oust the Maloofs, who are giving everybody - including the small market owners - a black eye.

 

[rainmaker]

Stern would never get ALL the owners to agree to seize the team. The small market teams could easily be in that position sometime in the future. They alone would not agree to that out of self interest.

Not sure about that. The Maloofs are really hurting future prospects of small market cities working with NBA teams to finance an arena, and for no other reason than they are broke.

 

[pdizo916]

Not sure about that. The Maloofs are really hurting future prospects of small market cities working with NBA teams to finance an arena, and for no other reason than they are broke.

With all of this said, the league cannot make the Maloofs sell. That's what I'm afraid of. Even if it is the best interest to the league that if they sold the team, the Maloofs have the "legal powers" to keep the team.

 

[The Hammer]

I disagree. The small market teams who have worked hard to establish themselves might be among the first to want to oust the Maloofs, who are giving everybody - including the small market owners - a black eye.

Agreed.

And just because a team is in a small market does not mean that the owners are broke or less financially solvent or have less money even. And that is the problem plaguing the Maloofs: their inability to take on more debt in order to generate more profit. They blame the profit projections, hiring a shill of an economist to say they are wrong (against the word and hard cash of the best in the business) instead of admitting they are too mortgaged to take on more debt. Hence KJs comment "Debt is real".

 

[The Hammer]

Stern would never get ALL the owners to agree to seize the team. The small market teams could easily be in that position sometime in the future. They alone would not agree to that out of self interest.

It all depends on how the new CBA is worded. If the NBA was savvy, since the CBA was being negotiated during this past year when the Maloofs were doing their shenanigans, they may have anticipated the Maloofs relying on rev sharing to stay afloat or some such. In which case, they may have included some very precise language that allows certain powers to the BOG to step in. We just don't know. Maybe that's the next thing that the suddenly excellent team of crack Bee reporters on this story can dig up for us!!

 

[HndsmCelt]

The way I understand it the NBA may have the power o revoke franchise rights from the Maloofs, but I highly doubt they would want o, it is just a bad precedent that will make the other owners as nervous as long tailed cats in a room full of rocking chairs. However that IS the stick, the key here may be to have a nice juicy organic farm fresh carrot. The NBA can offer to reduce or even forgive the Maloofs debt to the league if they sell. I would also guess that they can also make it clear that if and when the Maloofs are interested in another team they would be given approval as opposed to losing the team and having no chance of every being approved again.

 

[Capt. Factorial]

The NBA can offer to reduce or even forgive the Maloofs debt to the league if they sell. I would also guess that they can also make it clear that if and when the Maloofs are interested in another team they would be given approval as opposed to losing the team and having no chance of every being approved again.

Let's be realistic. There's no way that the NBA forgives $100M+ in debt, and even if they did, there's double no way they'd tell the debtors that got off the hook that they'd give them another chance with another team.

Once the Maloofs are out of the NBA, they will not be back. Ever. And everybody knows it.

 

[bajaden]

Stern would never get ALL the owners to agree to seize the team. The small market teams could easily be in that position sometime in the future. They alone would not agree to that out of self interest.

Never ever say never!

 

[jpsls]

Why are we under the impression small market owners would back the Maloofs? Owners want new arenas and the Maloofs saud new arenas aren't a necessity. The maloofs have alienated both large and small market owners.

 

[HndsmCelt]

Let's be realistic. There's no way that the NBA forgives $100M+ in debt, and even if they did, there's double no way they'd tell the debtors that got off the hook that they'd give them another chance with another team.

Once the Maloofs are out of the NBA, they will not be back. Ever. And everybody knows it.

I suspect there is no need to go all in. Given the fact that the Mallofs can not afford to sell the team and can only barely afford to keep it, they may well jump at 50 cents on the dollar to go away. It is also very doubtful they will ever be in the position to lay out 200 mill for a team again. But hey if they ever get their fiscal house in order it's not like they have always been terrible owners. Back when the billionaire playboys bought the team they were willing and able to spend what it took to build a championship contender. There is no reason to believe they would no be good owners again if they got their financial act together. Its not like Bud Sterling who put successive loser teams on the floor turning a profit by never spending a dime he did not have to until the sheer probability of successive top picks forced a winning team on him despite his efforts.

 

[bajaden]

With all of this said, the league cannot make the Maloofs sell. That's what I'm afraid of. Even if it is the best interest to the league that if they sold the team, the Maloofs have the "legal powers" to keep the team.

Well I think that would have to be decided in court. If the by laws of the league say that the league has the right to oust you if its in the best interest of the league as a whole, and you as a new owner signed to that agreement, then you have to abide by the rules. The NBA is a private club that produces public intertainment. Its similar to joining a private golf club. You pay a huge sum of money to be a member, and you have to abide by the rules of that club. If you don't, they take your membership away.

Now you can go to court, similar to what happened at Augusta golf club where they hold the masters, but your probably going to lose, which is what happened at Augusta. In the case of the NBA, the league would have to prove in court that the Maloofs are a detriment to the leagues best interest. My favorite quote from todays collumn, and I paraphrase is. " The Maloofs are millionaire's in a league full of Billionaires".

Also, if the league puts pressure on them to sell, or have the league use the best interest clause, what would the Maloofs do? Are they really going to sustain the costs or going to court for the next 2 or 3 years with a case that the league could afford to take all the way to the US surpreme court. Where would they get the money? Especially if the league decides to pull the Kings part of revenue sharing because they're misusing it. One never knows for sure what the Maloofs will do. As I've said before, they tend to make decisions based on emotion, instead of logic. They make bad decisions, and then run around trying to put out the fires they started.

 

[Amory]

You lost me at Voison.

 

[VF21]

With all of this said, the league cannot make the Maloofs sell. That's what I'm afraid of. Even if it is the best interest to the league that if they sold the team, the Maloofs have the "legal powers" to keep the team.

The catch phrase here is "best interests of the league." That's a lot like a homeowner's association being able to tell you what color you can paint your house "in the best interests of the community." LOTS of wiggle room potential in those five little words..

 

[HndsmCelt]

It would take a small army of lawyers to sort hings out but in the end I suspect while the NBA can not force a team to sell, they can pull the franchise rights leaving the Malofs with a roster a logo and uniforms but not NBA scheduled to play. So in the end if everyone played hardball the Maloofs could be told sell or you don't play. Of course in the art of the deal that is a final position. Long before they get there the NBA could and would offer many attractive ways out if indeed the NBA as such want the Maloofs gone.

 

[KingsFanSince85]

The NBA has the power to expand and contract, right? If things got ugly, what could stop the NBA and it's owners from agreeing to contract a franchise in peril, say the Kings for example, then granting the city of Sacramento an expansion franchise once a new arena is built? Fantasyland idea? Yes. But still a theorhetical possibility, I believe.

 

[SacTownKid]

I disagree. The small market teams who have worked hard to establish themselves might be among the first to want to oust the Maloofs, who are giving everybody - including the small market owners - a black eye.

Exactly, and from Sterns comments the other day it seemed like he was trying to cut the Maloofs off at the pass in case they had any ideas of abusing, or using the the revenue sharing program in a way that was not intended. He all but said if they do they might screw it up for everybody because the other owners can decide not to have it anymore. If anything, those other small markets would be fuming.

 

[Gary]

Minimum salary to make a profit.. These guys rely on their pro team to make a profit and being that's the case the Maloofs are running the team at a minimum level. Does anyone know what's going on with the revenue sharing they are getting?

 

[captain bill]

The NBA has the power to expand and contract, right? If things got ugly, what could stop the NBA and it's owners from agreeing to contract a franchise in peril, say the Kings for example, then granting the city of Sacramento an expansion franchise once a new arena is built? Fantasyland idea? Yes. But still a theorhetical possibility, I believe.

It makes way more sense to threaten contraction and get the process in motion, making the Maloofs really face the reality of losing the team. Then offer them the opportunity to sell to Burkle, some other group, or even the league. Actually contracting the team would make building an arena and creating a team that much harder, and there's no guarantee that the fans would come back to a new, unknown expansion team (especially after 2+ years of no NBA and resentment and apathy setting in).

 

[ParniValjak]

I suspected there is a way in which the NBA can make life really difficult for the Magoofs. If there is such a clause as "in the best interest of the league" then I am sure that legally it covers all sorts of things.

Stern has been very pointed at the Magoofs ever since they backed out of the deal and Stern does not get that pointed unless he has an ace up his sleeve. The other owners might just be pissed off enough to invoke this clause and kick them out of the league.

If there is such a clause and if the league as the right to cancel revenue sharing on "per case basis" then we might see the end of Magoofs a lot quicker than I though.

I would not be surprised if there is such a clause as most of the league in the world have similar clause. The Australian Football League for example as a clause for "Bringing the game into disrepute" which can be invoked at a club, player or official at any time if they do something that is outside the "spirit of the game".

 

[ReinadelosReys]

What Joe Maloof said earlier about not needing a new arena now because of revenue sharing certainly sets them up for some blowback from the league. I have no doubt a majority of the owners would prefer the Maloofs out of the league at this point and someone who is actually going to contribute to league profits to take their place. It remains to be seen what can legally be done about it, but I'm hopeful. An angered David Stern is typically a good ally to have on your side, and remember he used to be a lawyer himself.

I think they are abusing the system trying to squeeze out as much more money as they can from the team before they eventually decide to sell. Keep the payroll at leauge minimum, spent the least amount on Basketball and arena operations and hold their hands out to the NBA. I really think in less than 5 years the Kings will have new owners.

 

[Warhawk]

I think they are abusing the system trying to squeeze out as much more money as they can from the team before they eventually decide to sell. Keep the payroll at leauge minimum, spent the least amount on Basketball and arena operations and hold their hands out to the NBA. I really think in less than 5 years the Kings will have new owners.

I don't think it is an "abuse" per se, as Sterling has done it for years. I think it is an abuse when coupling it with the demand to move given their history and demonstrated lack of interest in even TRYING to make it work in Sacramento. I think the combination points to abuse.

The lack of bargaining in good faith, the coming to an agreement the NBA negotiated for them (at their request) and then rejecting it weeks later, their behind-the-scenes negotiations with another city while still paying on a loan to shareholders in Sacramento and financed by the City - all that points to abuse as well.

 

[gunks]

I think they are abusing the system trying to squeeze out as much more money as they can from the team before they eventually decide to sell. Keep the payroll at leauge minimum, spent the least amount on Basketball and arena operations and hold their hands out to the NBA. I really think in less than 5 years the Kings will have new owners.

I agree. Will we still have Reke and Cousins is the question.

 

[ParniValjak]

[/B]

I agree. Will we still have Reke and Cousins is the question.

I am hopeful that Stern and the rest of the owners can make life difficult to the point where Maloofs sell during the off-season or at the latest, during the next season

 

[VF21]

I am hopeful that Stern and the rest of the owners can make life difficult to the point where Maloofs sell during the off-season or at the latest, during the next season

If not, we have to hope that every action of the Maloofs is under such scrutiny that they have to at least make a pretense of improving the team. Since they've repeatedly stated that they have the money and are more than willing to spend it to improve the team, one would hope that they will at least secure the services of Evans and Cousins. Failure to do so would be, at the very least, embarrassing and further indication that they may, in fact, be "millionaires trying to play a billionaire's game."

 

[JB_kings]

[/B]

I agree. Will we still have Reke and Cousins is the question.

It's in nobody's best interest to let this stalemate play out. Lets hope Stern has some cards to play sooner rather than later.

 

[Kingster]

Well I think that would have to be decided in court. If the by laws of the league say that the league has the right to oust you if its in the best interest of the league as a whole, and you as a new owner signed to that agreement, then you have to abide by the rules. The NBA is a private club that produces public intertainment. Its similar to joining a private golf club. You pay a huge sum of money to be a member, and you have to abide by the rules of that club. If you don't, they take your membership away.

Now you can go to court, similar to what happened at Augusta golf club where they hold the masters, but your probably going to lose, which is what happened at Augusta. In the case of the NBA, the league would have to prove in court that the Maloofs are a detriment to the leagues best interest. My favorite quote from todays collumn, and I paraphrase is. " The Maloofs are millionaire's in a league full of Billionaires".

Also, if the league puts pressure on them to sell, or have the league use the best interest clause, what would the Maloofs do? Are they really going to sustain the costs or going to court for the next 2 or 3 years with a case that the league could afford to take all the way to the US surpreme court. Where would they get the money? Especially if the league decides to pull the Kings part of revenue sharing because they're misusing it. One never knows for sure what the Maloofs will do. As I've said before, they tend to make decisions based on emotion, instead of logic. They make bad decisions, and then run around trying to put out the fires they started.

I wonder if that's not the case. It may be that the Maloofs would have the burden of proof, not the league. In which case, it seems a much easier hill to climb. Maybe some lawyers can chime in on that one.