Burkle to focus on development, not Kings ownership
- Thread starter Purple Reign
- Start date
butteredbiscuit
G-League
It looks like it is going to happen. Guess NBA wants to make sure all the ducks are in a row. Get ready to put a statue of KJ and that Golden State Warrior minority owner out in front of the new arena? What happens to the land that Arco Arena is on?
Basically, there is a building moratorium in Natomas, so no new structure could go up in its place. Since Vice Mayor Ashby represents the district where Sleep Train Arena is located, I'm sure they'll find a way to use it to benefit the area.
whozit
Starter
Net worth doesn't necessarily mean liquid wealth. He may be unwilling to liquidate other assets thinking that the money from a regional sports network would be more than adequate to pay down the debt.
Isn't a lot of Ballmer's wealth from preferred Microsoft stock?
Section 101
All-Star
Livinthedream
All-Star
If you have a few billion sitting in your checking account, then you're not a very good businessman. You need to fire your accountant and financial advisor.
KingsFanSince85
All-Star
I beg to differ. If you've got a few billion sitting anywhere, you're a damn good businessman. Acquiring it in the first place is much harder than maintaining or building upon it.
Livinthedream
All-Star
The Maloofs may beg to differ.
KingsFanSince85
All-Star
I don't see how considering the fact that they maintained the fortune their father left them in 1980 for at least 25 years before finally squandering a lot of it. If their 2006 Carl's Jr. commercial is to be believed, they even managed to build upon it to the tune of 1 Billion before losing in the recession and/or Madoff ponzi scheme.
Regardless, as inept as all the brothers are, they still managed to maintain and build upon their father's fortune for quite a few years whereas they were never able to acquire it on their own. If they ever do manage to go flat broke, they'll never make it all back again like Donald Trump did.
So, back to the point ... If you have several billion sitting anywhere, you're a brilliant businessman. The Maloofs don't have billions and really never did.
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Livinthedream
All-Star
Smart businessmen didn't lose money in the recession. They made money or maintained. Housing bubble bursts and businessmen made money off that. Maloofs lost theirs. Being born with a silver spoon in your mouth does not make you a brilliant businessman. It takes time to burn through hundreds of millions of dollars, so having wealth for a few years after their father died is meaningless.
But that was not even my point. My point was that people with a lot of money usually have it invested somewhere with differing degrees of liquidity. It's not sitting under their mattress or at the local credit union.
kennadog
Dog On It!
Sorry, but financial structure and equity versus debt was specifically stated as one of the many issues they would be evaluating. As any good financial analyst would. Having worked with many developers, I know they don't typically like to invest more than the minimum of their own money. However, the more of their own money your developer is willing to put on the line is a very important underwriting positive to a lender.
If you were a lender would you feel better about a deal where your borrower is putting in 3% of their own money, while you put in 97% or are you feeling better if they put in 25% to your 75%? Which reflects a stronger belief by the developer in the quality of the project?
Remember, too, that this is good for Sacramento, too. Any private loans and you may be arguing who gets first lien position on the collateral.
The higher the amount of debt involved, the more risk to the stability of the product or business. Now, I find it interesting that Hansen borrowed the max he could, when it would seem his partners could easily come up with a sizable amount of money by cashing in other investments. But NBA teams are mostly a good investment when you sell the team, not year to year.
Randivé said (Bee?) that their investment group could come up with three times the equity they need to finance this deal. Apparently he's debt adverse and it means putting more personal money at risk. There's a difference between betting with your own money and betting with someone else's money.
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kennadog
Dog On It!
Oops. Forgot top say that if the Sacramento ownership group buys the Kings, they will own the land the arena sits on in Natomas. As part of the deal, the city is essentially giving them the city portion of that land. (For all the land the city will turn over, the owners are going to have to come up with $38 million in cash or loans to invest in construction of the new arena.
When the new arena is complete, and the city's current loan is refinanced, they could use the land for collateral for the new loan and develop that land. Or they could sell the land to another developer and use some other collateral for the refinanced loan.
Either way, that's 188 acres in Natomas to develop once the flood moratorium is lifted. By the way, in the term, the owners are offering to buy the city's Natomas portion for estimated market value as if no moratorium existed. Huge plus for the city.
When the new arena is complete, and the city's current loan is refinanced, they could use the land for collateral for the new loan and develop that land. Or they could sell the land to another developer and use some other collateral for the refinanced loan.
Either way, that's 188 acres in Natomas to develop once the flood moratorium is lifted. By the way, in the term, the owners are offering to buy the city's Natomas portion for estimated market value as if no moratorium existed. Huge plus for the city.
KingsFanSince85
All-Star
We completely agree that the Maloof bros. are far from brilliant businessmen. You're missing the point. They were mentioned as an example in support of the premise that it is far easier to maintain or increase an already established fortune than it is to actually create that fortune from scratch. As bad as they are at business, they were able to maintain and grow an already established fortune for 25 years. However, I don't think many believe they could have amassed a fortune from scratch, like their father did.
As I said, if someone has several billion sitting somewhere (assuming they made that money themselves), they are a brilliant businessman regardless whether it's under the mattress or in a checking account. The fact that they were able to make that type of money, conventionally or unconventionally, proves as much.
The Maloof's don't qualify on any front. They didn't build the fortune from scratch and they never had several billion at any point in time.
Ron Burkle, Mark Mastrov and Vivek Ranadive are brilliant. The Maloof bros., on the other hand, essentially won the genetic lottery.
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uolj
Starter
Sorry for what? If you're right and the debt load is a significant issue, that's a good thing.
I just don't think it is. Ballmer reportedly cashed out $1.3 billion in Microsoft stock a few years ago and one conclusion to be drawn from that was that it was in preparation for investing in a team and arena for Seattle. I just don't think there's really any chance that the NBA owners look at the Hansen/Ballmer offer and vote against it because it uses more debt for financing than Sacramento's plan does. They obviously have the pockets not to go under, and that would be the only concern on debt worth scuttling a deal over.
