Clippers move to LA was not approved by the league

[Section 101]

http://www.newjerseynewsroom.com/professional/could-new-jersey-get-the-tampa-bay-rays

It's a baseball article, but has Clippers move info. Very interesting. The clippers move was not approved.

In 1984, San Diego Clippers owner Donald Sterling thumbed his nose at NBA officials and moved his franchise to Los Angeles without league consent. He was fined $100 million for the move. Sterling sued the league. The two parties settled. Sterling stayed in LA and paid the NBA a $6 million fine.
That settlement may come back to bite Sterling later this month should the NBA Sacramento Kings owners, the Maloofs brothers, pick up and move into the Los Angeles market in Anaheim and share the area with the Los Angeles Lakers and Sterling's Clippers. The Maloofs, using the Sterling precedent, could end up paying no compensation for entering the LA market.

 

[Peter_Gibbons]

I mentioned this whole thing a few weeks back. Sterling just did what he wanted and did not pay a hefty fine for literally moving next door to the lakers in the same city. There is no territorial rights in the NBA if the BOGs approve the move, there is nothing Sterling or Buss can ask for. The relocation fee is for the entire league to share, not really a settlement for the clips/lakes like a lot of people think.

 

[Trueblood]

I mentioned this whole thing a few weeks back. Sterling just did what he wanted and did not pay a hefty fine for literally moving next door to the lakers in the same city. There is no territorial rights in the NBA if the BOGs approve the move, there is nothing Sterling or Buss can ask for. The relocation fee is for the entire league to share, not really a settlement for the clips/lakes like a lot of people think.

And like I've been saying, how can he ask for a relocation fee when he's had the door open to move to Anaheim for 18 years now? It's his fault that the Anaheim option is there in the first place.

 

[twosomeca]

http://www.newjerseynewsroom.com/professional/could-new-jersey-get-the-tampa-bay-rays

It's a baseball article, but has Clippers move info. Very interesting. The clippers move was not approved.

In 1984, San Diego Clippers owner Donald Sterling thumbed his nose at NBA officials and moved his franchise to Los Angeles without league consent. He was fined $100 million for the move. Sterling sued the league. The two parties settled. Sterling stayed in LA and paid the NBA a $6 million fine.
That settlement may come back to bite Sterling later this month should the NBA Sacramento Kings owners, the Maloofs brothers, pick up and move into the Los Angeles market in Anaheim and share the area with the Los Angeles Lakers and Sterling's Clippers. The Maloofs, using the Sterling precedent, could end up paying no compensation for entering the LA market.

There will be a relo fee, but there might not be a rights fee. Also, as said above, Sterling has had the OC market for the taking all along. He declined and now he is upset? = d'baggery.

 

[ArcoKings]

http://www.newjerseynewsroom.com/professional/could-new-jersey-get-the-tampa-bay-rays

It's a baseball article, but has Clippers move info. Very interesting. The clippers move was not approved.

In 1984, San Diego Clippers owner Donald Sterling thumbed his nose at NBA officials and moved his franchise to Los Angeles without league consent. He was fined $100 million for the move. Sterling sued the league. The two parties settled. Sterling stayed in LA and paid the NBA a $6 million fine.
That settlement may come back to bite Sterling later this month should the NBA Sacramento Kings owners, the Maloofs brothers, pick up and move into the Los Angeles market in Anaheim and share the area with the Los Angeles Lakers and Sterling's Clippers. The Maloofs, using the Sterling precedent, could end up paying no compensation for entering the LA market.

So the Kings may only have to pay approximately $30 million (based on Sonics to OKC) to the NBA and their loan to Sacramento of $77 million. That's $107 million for moving expenses just for these two line items alone. Samueli/Anaheim proposed to loan the Maloofs $50 million to move so that puts them at $57 million left to pay. (Scratching my head) That's still a lot of money to move.

 

[Brac-o-matic]

So the Kings may only have to pay approximately $30 million (based on Sonics to OKC) to the NBA and their loan to Sacramento of $77 million. That's $107 million for moving expenses just for these two line items alone. Samueli/Anaheim proposed to loan the Maloofs $50 million to move so that puts them at $57 million left to pay. (Scratching my head) That's still a lot of money to move.

It's a lot less when you figure in the money they'll get from selling the arena...

 

[Trueblood]

I do find this hilarious though. It sucks for Sactown but Sterling subconciously set the table for this move. I believe that the Maloofs would stick things out for another year in Sacramento, waiting on ICON/Taylor or Universal to hopefully pan out, if the Anaheim option wasn't available. Let's be honest about it. When you look at their options, Anaheim is the one that fits all their criteria. It's not far away from Vegas like Louisville and KC, has an arena in place whereas Seattle and Vegas don't and fits their single, hot blondes on every corner lifestyle whereas the San Jose/South bay thing just wouldn't be the same.

Also, you now have the precedent that Sterling set back in '84. If he could settle for just $6 million after being fined $100 million, then you figure that the Maloof lawyers now have another bullet in the chamber for making this move.

 

[captain bill]

Just FYI, whatever happened in 84 is NOT precedent for what happens now. Obviously a lot has changed since then (specifically, the legal framework of the NBA). The league has undoubtedly created rules to deal with situations like this, and Stern was likely able to get away with what he did because the NBA didn't have any rules and was simply trying to use the power of the Commissioner's office to block the move without any real legal power backing it.

 

[ParniValjak]

I do find this hilarious though. It sucks for Sactown but Sterling subconciously set the table for this move. I believe that the Maloofs would stick things out for another year in Sacramento, waiting on ICON/Taylor or Universal to hopefully pan out, if the Anaheim option wasn't available. Let's be honest about it. When you look at their options, Anaheim is the one that fits all their criteria. It's not far away from Vegas like Louisville and KC, has an arena in place whereas Seattle and Vegas don't and fits their single, hot blondes on every corner lifestyle whereas the San Jose/South bay thing just wouldn't be the same.

Also, you now have the precedent that Sterling set back in '84. If he could settle for just $6 million after being fined $100 million, then you figure that the Maloof lawyers now have another bullet in the chamber for making this move.

And another thing that being overlooked here but that is of significant value is that just by moving the team to Anaheim, the value of the team increases by some $100million.

 

[Section 101]

And another thing that being overlooked here but that is of significant value is that just by moving the team to Anaheim, the value of the team increases by some $100million.

Where did you get this $100 million from?

According to Forbes the Clippers are only worth $12 million more than the Kings. And that is with the Clippers newest TV deal and the Kings 8 year old one. With a new TV deal the Kings would be at or more than the Clippers.

Oh and in 2007, The Kigns were valued at $385 and the Clippers $294. The Kings decline in value has more to do with wins/losses than the arena.

 

[ParniValjak]

Where did you get this $100 million from?

According to Forbes the Clippers are only worth $12 million more than the Kings. And that is with the Clippers newest TV deal and the Kings 8 year old one. With a new TV deal the Kings would be at or more than the Clippers.

Oh and in 2007, The Kigns were valued at $385 and the Clippers $294. The Kings decline in value has more to do with wins/losses than the arena.

I never said it was to do with the arena. Its got to do with the location of the team. A team as is would be worth significantly more in Anaheim than in Sacramento. Thats something that is being overlooked here.

Think of it this way, if you could pick you house and move it from its current location into Anaheim it would be worth a few $10K more. Its no different to a professional franchise and its no surprise that professional franchises in big markets are worth more than those is smaller market. Now obviously, if the small market team is winning and has history of success, their price will be relatively high. But all things being equal, location of the team directly affects the value of the franchise.

 

[twosomeca]

So the Kings may only have to pay approximately $30 million (based on Sonics to OKC) to the NBA and their loan to Sacramento of $77 million. That's $107 million for moving expenses just for these two line items alone. Samueli/Anaheim proposed to loan the Maloofs $50 million to move so that puts them at $57 million left to pay. (Scratching my head) That's still a lot of money to move.

The NBA can structure the repayment of that relo fee however they want. I wouldn't expect it wouldn't be due immediately. Also, looks like there is a battle brewing over what is actually owed in terms of the $77M. Can't help but wonder if that is something that will ultimately end up in court.

 

[ParniValjak]

The NBA can structure the repayment of that relo fee however they want. I wouldn't expect it wouldn't be due immediately. Also, looks like there is a battle brewing over what is actually owed in terms of the $77M. Can't help but wonder if that is something that will ultimately end up in court.

Its looking like it could be an ugly battle and the actions of Sacramento certainly look like actions of someone nervous about whats going to happen. I've got no doubt that Maloofs will pay their debts but how they pay them will be an interesting question. Sacramento naturally wants money (ie ~ $77 million) and they are pushing for it hard and this is something that makes me think that the suggestions of Kings being able to given them ARCO, a $25M share of the team and make up the difference in cash. Now clearly for the Kings, this is preferable but Sacramento its the worst possible outcome.

They would get a building that is a white elephant and serves no real purpose to the city, a $25M share of the team that in terms of percentage could decrease depending on when it has to be paid, and difference in cash! This clearly is the nightmare option for the city and hence why they are wanting Maloofs to put things in writing.

Now Maloofs might also be reluctant to give $25M of their share of the team which might result them in losing their priority ownership!

 

[Section 101]

I never said it was to do with the arena. Its got to do with the location of the team. A team as is would be worth significantly more in Anaheim than in Sacramento. Thats something that is being overlooked here.

Think of it this way, if you could pick you house and move it from its current location into Anaheim it would be worth a few $10K more. Its no different to a professional franchise and its no surprise that professional franchises in big markets are worth more than those is smaller market. Now obviously, if the small market team is winning and has history of success, their price will be relatively high. But all things being equal, location of the team directly affects the value of the franchise.

So then why arent the clippers worth $100 million more than the Kings right now?

 

[Trueblood]

So then why arent the clippers worth $100 million more than the Kings right now?

Because of who owns them. The organization is synonomous with the word "joke". That lowers the value.

It's similar with the Nets. They've been known as a joke as well so despite being in the tri state area, their value is low. Now that Prokhorov owns them and they're about to move 16 miles to the east in Brooklyn, the value will go way up. Having "Brooklyn" in front of your name as opposed to "New Jersey" counts when determining team value. Not sure about "Anaheim" and "Sacramento" though. Sounds like a wash to me.

Same with the Clips. Despite the owner, Blake Griffin makes their value go up. When Forbes does it's rankings next year, you'll see their value go up due to the extra season ticket holders, potential new tv deal with Blake boosting ratings as well as new corporate sponsors.

 

[Section 101]

Because of who owns them. The organization is synonomous with the word "joke". That lowers the value.

It's similar with the Nets. They've been known as a joke as well so despite being in the tri state area, their value is low. Now that Prokhorov owns them and they're about to move 16 miles to the east in Brooklyn, the value will go way up. Having "Brooklyn" in front of your name as opposed to "New Jersey" counts when determining team value. Not sure about "Anaheim" and "Sacramento" though. Sounds like a wash to me.

Same with the Clips. Despite the owner, Blake Griffin makes their value go up. When Forbes does it's rankings next year, you'll see their value go up due to the extra season ticket holders, potential new tv deal with Blake boosting ratings as well as new corporate sponsors.

But the clippers tv deal is only 2 years old, the Kings is 8 years. The Kings in 2007 were worth almost $100 million more than the clippers before their new deal. The Clips new TV deal only increased the value by about $20 million with TV deal going from $12.5 to $23 million.

The Kings have lost $90 million in value since the 2006 season. Who's fault is that? It's not the city or the fans fault. It's the Maloofs. Lets see let Adelman go, Carls Jr commercial, Muss the drunk, reggie, natt, no playoffs, ticket prices way too high, weak marketing equals less fans attending games. Now they have fixed some of those things the past 2 years and there have been more fans at games.

 

[JB_kings]

Because of who owns them. The organization is synonomous with the word "joke". That lowers the value.

It's similar with the Nets. They've been known as a joke as well so despite being in the tri state area, their value is low. Now that Prokhorov owns them and they're about to move 16 miles to the east in Brooklyn, the value will go way up. Having "Brooklyn" in front of your name as opposed to "New Jersey" counts when determining team value. Not sure about "Anaheim" and "Sacramento" though. Sounds like a wash to me.

Same with the Clips. Despite the owner, Blake Griffin makes their value go up. When Forbes does it's rankings next year, you'll see their value go up due to the extra season ticket holders, potential new tv deal with Blake boosting ratings as well as new corporate sponsors.

What does Sterling owning the team have to do with the value of the team? If I want to buy the Clippers, they are at a discount price because of Sterling? Once I own the team and assuming I'm not a joke, they instantly are worth 100 million more? Sorry I don't follow the logic there.

Since Maloofs are down on their luck with their business and have made some bad decsions and have a bad team record wise, they should be worth less than the Clippers. Maybe it goes back to the same old point that has been made, the Lakers are worth so much because of their legacy, their players and TV contracts. Unless a team that moves there can run off a string of championships and get a TV contract that amounts to billions, then the Kings/Royals are worth about the same. That is until they actually have something worth value.

 

[Capt. Factorial]

What does Sterling owning the team have to do with the value of the team? If I want to buy the Clippers, they are at a discount price because of Sterling? Once I own the team and assuming I'm not a joke, they instantly are worth 100 million more? Sorry I don't follow the logic there. ... Maybe it goes back to the same old point that has been made, the Lakers are worth so much because of their legacy, their players and TV contracts.

I think that's the point here. The Clippers aren't devalued because Sterling owns the team; the Clippers is lower than it should be because Sterling has mismanaged the team. Had he gone out, spent serious money, and built a second contender in L.A., he'd have increased his fanbase, his ticket sales, his TV contract, and his advertising value. Instead, by being cheap (and there's a difference between being cheap as a general rule and saving money during a rebuild phase, which is what I believe the Kings have done) Sterling has failed to maximize his fanbase in the second-largest market in the country and created a legacy of failure rather than a legacy of success, and that has hurt the value of the team relative to what it should be.

 

[Spike]

Which I think may be what irks Sterling about the potential move to Anaheim. He knows the Maloofs will spend money to build a contender (well, when they had money anyway). He doesn't want that kind of competition - he wouldn't mind another Sterling in the OC, because he knows they wouldn't spend and increase the fan base.

 

[JB_kings]

Ok let me state it another way. I don't think that just by moving, they are instantly worth 100 million more. They have the potential to be worth more once they negotiate new media contracts. But this isn't all gaining assets in the move... they also are borrowing money to move and that is taking on more debt. So now they are in debt to the NBA for possible lines of credit they took out over the years. They will owe 50 million to Samueli for the relocation expenses. Then they will owe the City of Sacramento 77 million. So being in a very deep hole means that those media contracts better pay off much higher than the expected 10 million more a year.

And knowing the heavy commitments involved in moving, how much will they have to go bid on free agents and resign players?

 

[LilMissDiva]

It just seems like all of this is going to put the Maloofs in deeper debt - it is not going to make their finances better at all. IMO, they just need to start over. Staying here and working with the pieces they have would be a far better choice right now. However, as seeing they used to be Billionaires and now have less than nothing shows their Management hasn't been that stellar.

Just my personal opinion of course... I'm not looking through their bank statements or anything ya know.

 

[kennadog]

And the Clippers have played a distant second to the Lakers ever since. The other night I was thinking about NY and it's second class franchises in a major media market. The Nets, the Jets and the Mets have almost always played second fiddle there to the Knicks, the Giants and the Yankees.

They can scream all they want about Anaheim being a different market, but Orange County and LA are rated by Nielson as a combined media market, when they rank size. The Maloofs are going from being the only game in town in Sacramento to an extremely crowded sports market where they'll be tiny fish in a big ocean and behind the Clips and the Lakers. Apparently they're desperate enough to not care about that.

 

[Trueblood]

I think that's the point here. The Clippers aren't devalued because Sterling owns the team; the Clippers is lower than it should be because Sterling has mismanaged the team. Had he gone out, spent serious money, and built a second contender in L.A., he'd have increased his fanbase, his ticket sales, his TV contract, and his advertising value. Instead, by being cheap (and there's a difference between being cheap as a general rule and saving money during a rebuild phase, which is what I believe the Kings have done) Sterling has failed to maximize his fanbase in the second-largest market in the country and created a legacy of failure rather than a legacy of success, and that has hurt the value of the team relative to what it should be.

Right. This is what I meant but didn't go into detail or clarify.

 

[Trueblood]

Which I think may be what irks Sterling about the potential move to Anaheim. He knows the Maloofs will spend money to build a contender (well, when they had money anyway). He doesn't want that kind of competition - he wouldn't mind another Sterling in the OC, because he knows they wouldn't spend and increase the fan base.

Bingo. He's taken advantage of being the only NBA option for people who can't afford or don't have access to Laker tickets. Not the case anymore if this relocation happens.

 

[twosomeca]

Its looking like it could be an ugly battle and the actions of Sacramento certainly look like actions of someone nervous about whats going to happen. I've got no doubt that Maloofs will pay their debts but how they pay them will be an interesting question. Sacramento naturally wants money (ie ~ $77 million) and they are pushing for it hard and this is something that makes me think that the suggestions of Kings being able to given them ARCO, a $25M share of the team and make up the difference in cash. Now clearly for the Kings, this is preferable but Sacramento its the worst possible outcome.

They would get a building that is a white elephant and serves no real purpose to the city, a $25M share of the team that in terms of percentage could decrease depending on when it has to be paid, and difference in cash! This clearly is the nightmare option for the city and hence why they are wanting Maloofs to put things in writing.

Now Maloofs might also be reluctant to give $25M of their share of the team which might result them in losing their priority ownership!

They already have a contract that deals with the damages issue or will be so interpreted. I don't see the Kings breaching the deal. The city is acting like the Kings are in anticipatory breach of contract. If the city were a private party, they couldn't even get into court right now, and then you have Steinberg introducing his Bill today. It's a very odd situation. I'm not exactly sympathetic to the Maloofs because they took public money, so they shouldn't be surprised that this is happening.

As for the Clippers, they are tenants in someone else's building. That also effects value of the team.

 

[Glenn]

And the Clippers have played a distant second to the Lakers ever since. The other night I was thinking about NY and it's second class franchises in a major media market. The Nets, the Jets and the Mets have almost always played second fiddle there to the Knicks, the Giants and the Yankees.

They can scream all they want about Anaheim being a different market, but Orange County and LA are rated by Nielson as a combined media market, when they rank size. The Maloofs are going from being the only game in town in Sacramento to an extremely crowded sports market where they'll be tiny fish in a big ocean and behind the Clips and the Lakers. Apparently they're desperate enough to not care about that.

Certainly they are desperate. Perhaps also they are using Anaheim as a huge club to hold over this area's head to get it moving in a direction that suits them better. D Day is coming for the good or the bad and maybe forcing the issue is a good thing. The area is responding well, actually. It still hasn't passed that critical point where the Maloofs could be content to stay. The investment in time and money to the Maloofs may have been very worth it this whole last few months.

I think they are deparate but, as I am not a business man, do you make decisons like this in state of panic? As someone who simply watches the team on TV I can follow them just as closely in Anaheim so although the move would hurt a bit, in the end it could be a good thing for me, as a fan. (Don't shoot me!) If this forum is here under a new name, I will still follow the team which is not simply a name but a group of people who I know better than any other team.

I still think it is a mistake to leave for all the reasons people have found out. Even if the arena aka ARCO is inadequate for the NBA, $68 mil is owed at a rate of about $2 mil per year and that's chicken feed. On a cash flow basis, being in an "inadequate" arena still makes more sense than this very complicated and expensive move. I hope I am being relatively unbiased in saying that or I wasted a whole paragraph setting up my opinion. The riches of OC are theoretical but I suppose this idea that ARCO will resume selling out with a winner tenant is theoretical also. ARCO and the area have a history of NBA basketball and there is none in Anaheim so really, after the initial year or two of excitement, there is no telling how well the team will do there. It is far more a known of what will happen here in the next few years.

Can't a team make money in a junky arena? I always choke on the concept that spending $300 mil to $400 mil results in more profits than spending $68 mil.

I am not a businessman.

 

[JB_kings]

They already have a contract that deals with the damages issue or will be so interpreted. I don't see the Kings breaching the deal. The city is acting like the Kings are in anticipatory breach of contract. If the city were a private party, they couldn't even get into court right now, and then you have Steinberg introducing his Bill today. It's a very odd situation. I'm not exactly sympathetic to the Maloofs because they took public money, so they shouldn't be surprised that this is happening.

As for the Clippers, they are tenants in someone else's building. That also effects value of the team.

Well given that they got a 50 million loan from Samueli to cover the anticipated expense of relocation fees, then it's not a huge stretch to conclude that they are not planning on paying the 77 million to the city. I too would be very worried that they are going to break the lease and feel comfortable that being in breach has a good outcome for them and leaves the city on the hook. While the devil was in the details of the contracts signed, the net effect is moving vans pointed south on I-5 and the Maloofs giving the finger to the city and it's people on the way out of town.

I can see why the city is making a big stink. It's about forming public opinion and putting public pressure on the team to do the right thing and not the legal loophole thing. The NBA does not need the bad publicity and reputation of their franchises being bad citizens. But if you look at their history, they have a few bad behaving eggs in their franchise basket.

Maybe the NBA has another loan for them to take out and pay the city back? Yeah I'm being sarcastic...

 

[kennadog]

They already have a contract that deals with the damages issue or will be so interpreted. I don't see the Kings breaching the deal. The city is acting like the Kings are in anticipatory breach of contract. If the city were a private party, they couldn't even get into court right now, and then you have Steinberg introducing his Bill today. It's a very odd situation. I'm not exactly sympathetic to the Maloofs because they took public money, so they shouldn't be surprised that this is happening.

As for the Clippers, they are tenants in someone else's building. That also effects value of the team.

Well, tecvhnically it was the prior owner who accepted it, but he was going bankrupt. The Maloofs inherited the debt. We were very likely to lose the team then, except for the Maloofs buying majority ownership and keeping the Kings in Sacramento.