Grizzlies sale good precedent for Kings?

[Jose]

Pera had to agree to keep the team in town for 15 years...

http://basketball.realgm.com/wireta...ep_Grizzlies_In_Memphis_For_At_Least_15_Years

Good to see the NBA taking measures to ensure teams stay put. Could be a good precedent for us, when the 'loofs have to sell.

 

[///Mink]

Memphis has the FedExForum which is substantially newer and better than STA. No way we get a guarantee like that without an arena.

 

[Jose]

Memphis has the FedExForum which is substantially newer and better than STA. No way we get a guarantee like that without an arena.

Yes but, interestingly enough, that's not what Stern's quote alludes to. Its about Memphis being a great NBA city and deserving to keep their team.

Sacramento was ready to deliver an arena under terms that everyone, including the NBA, had agreed to - Stern won't forget that.

 

[nbaFan]

Yes , the NBA prefers to keep teams where they are. They should, especially if the city has supported it as long as Sac has. However this isnt always the case, like Seattle. The NBA values the arena in place over us fans in recent years. Seems cities are now being used as pawns. Unfortunately I believe the Maloofs sell to an out of town group very soon, and i mean real soon. Stay tuned

 

[Kingsfan23]

Memphis has the FedExForum which is substantially newer and better than STA. No way we get a guarantee like that without an arena.

Right, it would be hard to believe a new owner would be forced to stay here 15 years when Sleep Train might not even make it that long

Although, the precedent of forcing the new owner to make a legitimate go to keep the team where it is for at least a few years I hope will carry over

 

[kennadog]

Hard to see the NBA approving a sale to relocate the Kings when there is currently more than one potential buyer who wants to keep the Kings in Sac.

 

[JB_kings]

Yes , the NBA prefers to keep teams where they are. They should, especially if the city has supported it as long as Sac has. However this isnt always the case, like Seattle. The NBA values the arena in place over us fans in recent years. Seems cities are now being used as pawns. Unfortunately I believe the Maloofs sell to an out of town group very soon, and i mean real soon. Stay tuned

Breaking news from the Seattle Kings fan here...

 

[Larry David]

Hard to see the NBA approving a sale to relocate the Kings when there is currently more than one potential buyer who wants to keep the Kings in Sac.

Actually, I think the NBA will push for a local buyer, but the owners will end up approving Hansen’s purchase.

I think there will be bidders to keep the team here. Let’s assume it Burkle.

The problem / issue is – how much over Burkle’s bad will Hansen go. Burkle could outspend Hansen, but he’d probably like to make some money or at least break even on the team at some point in the next 10 years. Whereas the Hansen group appears to be a crusade to bring a team back to Seattle. The Kings are the last team that could move soon, and the group doesn’t want to wait for the Bucks, Bobcats, or Hawks.

Expansion has been dangled, but it would need to be approved by the owners. There are a lot of owners that don’t want to slice up the national TV money any more.

In the end, I think the factors above cause the Hansen group to outbid the local buy and force the NBA’s Board of Governor’s hand with a bid that is 75 to 100 million over the top local bid.

At which point, its game over. I have no doubt that there will be many replies about – Stern owes us, the league is pissed at the Maloofs, they want to keep the team here, ect., ect. ect. Those are valid arguments, but you are missing the point or not being objective.

There is no way 20 NBA owners tell another owner – you have to leave 100 million on the table to keep the team in Sacramento. Even if they did, the Maloofs would have a great lawsuit against the league. We needed a sale over $375 million to make any profit. Hansen offered $450 million to buy the team. The NBA said we couldn’t take it and said they would only approve a sale for $350 to Burkle. Jury we are entitled to $100 million (and if they could get this to trial as an anti-trust case, the damages are trebled – 100 x 3 = $300 million.)

Plus, if they wait until next March, they aren’t taking on Stern. Do you think Silver is looking to take on a anti-trust lawsuit with 300 million in damages on the table in his first summer? When he can just fix the Seattle mess instead?

I think this ends up in a sale. If Hansen bids close to a local buyer, team says and we get a new arena in the rail yards. That would be awesome. If he blows the local buyer out of the water, it’s over.

PS - Larry Ellison trying to buy the Hornets is different because the league wasn’t going to try to sue itself. The Maloofs need somebody to bid over market to make any profit. Finally, Stern was able to persuade those other owners in the Ellison / other buyer situation, “Look. I made you a lot of money and your franchise appreciated under my watch. You need to do the right thing by me and other owners and leave a little money on the table. Don’t break the system you benefited from.” You think the Maloofs are buying that speech? Stern couldn’t get them to take the rail yard deal, and they marched across the street for the mother of all press conferences.

 

[Bricklayer]

Actually, I think the NBA will push for a local buyer, but the owners will end up approving Hansen’s purchase.

I think there will be bidders to keep the team here. Let’s assume it Burkle.

The problem / issue is – how much over Burkle’s bad will Hansen go. Burkle could outspend Hansen, but he’d probably like to make some money or at least break even on the team at some point in the next 10 years. Whereas the Hansen group appears to be a crusade to bring a team back to Seattle. The Kings are the last team that could move soon, and the group doesn’t want to wait for the Bucks, Bobcats, or Hawks.

Expansion has been dangled, but it would need to be approved by the owners. There are a lot of owners that don’t want to slice up the national TV money any more.

In the end, I think the factors above cause the Hansen group to outbid the local buy and force the NBA’s Board of Governor’s hand with a bid that is 75 to 100 million over the top local bid.

At which point, its game over. I have no doubt that there will be many replies about – Stern owes us, the league is pissed at the Maloofs, they want to keep the team here, ect., ect. ect. Those are valid arguments, but you are missing the point or not being objective.

There is no way 20 NBA owners tell another owner – you have to leave 100 million on the table to keep the team in Sacramento. Even if they did, the Maloofs would have a great lawsuit against the league. We needed a sale over $375 million to make any profit. Hansen offered $450 million to buy the team. The NBA said we couldn’t take it and said they would only approve a sale for $350 to Burkle. Jury we are entitled to $100 million (and if they could get this to trial as an anti-trust case, the damages are trebled – 100 x 3 = $300 million.)

Plus, if they wait until next March, they aren’t taking on Stern. Do you think Silver is looking to take on a anti-trust lawsuit with 300 million in damages on the table in his first summer? When he can just fix the Seattle mess instead?

I think this ends up in a sale. If Hansen bids close to a local buyer, team says and we get a new arena in the rail yards. That would be awesome. If he blows the local buyer out of the water, it’s over.

PS - Larry Ellison trying to buy the Hornets is different because the league wasn’t going to try to sue itself. The Maloofs need somebody to bid over market to make any profit. Finally, Stern was able to persuade those other owners in the Ellison / other buyer situation, “Look. I made you a lot of money and your franchise appreciated under my watch. You need to do the right thing by me and other owners and leave a little money on the table. Don’t break the system you benefited from.” You think the Maloofs are buying that speech? Stern couldn’t get them to take the rail yard deal, and they marched across the street for the mother of all press conferences.

Um, the NBA blocks purchase offers all the time. ALL THE TIME. They did it to the Maloofs with Anaheiim. They blocked Larry Ellison's bids to the Hornets because he was going to bring them to San Jose. They pick and choose which offers can be accepted as a matter of course. The Maloofs are free to try to sue over that all they want, but that's just them trying to break the franchise model of the league again, and they'll have $10mil in legal fees before they are done. Note: Expansion is always atractive to owners because they get a big expansion fee bonus. Long term maybe it costs them money in marginal TV revenues. Short term they get handed a large check to buy a new Ferrarri with.

 

[Larry David]

There is a difference between Stern pushing an owner to take another bid and the NBA’s Board of Governor rejecting a formal application by owners that are erratic, desperate, and litigious enough to sue an exercise ball company over Garcia’s contract. Higher bids are rejected. Public and formal applications to sell the team are not. That’s on the table here.

Have any of those other offers been in the 75-100 million dollar range? I think not.

It's fine to look on the bright side, but saying there is a comp out there where 2/3 of the owners block a bid where Hansen goes 75-100 million over market is not true. And that what I was talking about


The American Needle case with the NFL clears most of the road for an anti-trust case by the Maloofs. Even without challenging the franchise model, a 75-100 million dollar case could proceed at a breach of fiduciary duty or wrongful interference with contract case within the franchise model.

They want to sit on the Wells Fargo stock, but I think they would sell $10 million to pay the fees to collect between $100 and $300 million. I know where George would like to spend that money.

The whole point was – this all changes and the team is gone: (1)when the Maloofs decide to sell; and (2) if the Hansen group makes an offer large enough to force the Board of Governor’s hand.

If you think more than 11 owners are going to force a fellow owner to leave 100 million on the table to save Sacramento, you are either delusional or constructing an argument backwards to fit a conclusion.

Your math is a little off on expansion. A onetime 1/30 share of 400-600 million now, vs. a 1/30 share of several billion dollars forever. It’s an immediate revenue cut. .11% doesn’t sound big, but when you multiply that by a few billion forever … it adds up fast. The Maloofs would take a deal like that. I don’t think a majority of the owners are game.

 

[JB_kings]

Hard to know what kind of impact expansion in Seattle would have on the other owners until you see real numbers. It's not so much a forever thing as much as the ability to grow TV contract revenue as each deal expires. One thing in the favor of expansion is that when the next TV contracts are negotiated, the NBA's bargaining position is stronger coming in with Seattle at #14 and Sacramento at #20. Bigger TV contracts should offset splitting the pie being split 31 ways. If the Kings move to Seattle, the position is not strong as they essentially cannibalize the #20 to gain the #14. The goal here is to maximize potential revenue growth at each contract renewal.

 

[Section 101]

There is a difference between Stern pushing an owner to take another bid and the NBA’s Board of Governor rejecting a formal application by owners that are erratic, desperate, and litigious enough to sue an exercise ball company over Garcia’s contract. Higher bids are rejected. Public and formal applications to sell the team are not. That’s on the table here.

Have any of those other offers been in the 75-100 million dollar range? I think not.

It's fine to look on the bright side, but saying there is a comp out there where 2/3 of the owners block a bid where Hansen goes 75-100 million over market is not true. And that what I was talking about


The American Needle case with the NFL clears most of the road for an anti-trust case by the Maloofs. Even without challenging the franchise model, a 75-100 million dollar case could proceed at a breach of fiduciary duty or wrongful interference with contract case within the franchise model.

They want to sit on the Wells Fargo stock, but I think they would sell $10 million to pay the fees to collect between $100 and $300 million. I know where George would like to spend that money.

The whole point was – this all changes and the team is gone: (1)when the Maloofs decide to sell; and (2) if the Hansen group makes an offer large enough to force the Board of Governor’s hand.

If you think more than 11 owners are going to force a fellow owner to leave 100 million on the table to save Sacramento, you are either delusional or constructing an argument backwards to fit a conclusion.

Your math is a little off on expansion. A onetime 1/30 share of 400-600 million now, vs. a 1/30 share of several billion dollars forever. It’s an immediate revenue cut. .11% doesn’t sound big, but when you multiply that by a few billion forever … it adds up fast. The Maloofs would take a deal like that. I don’t think a majority of the owners are game.

Hansen isn't going in $75-100 mil over market. He would still have to pay off the city bonds and pay the relocation fee. Plus he still has to get the arena done. So basically it would be around $1 billion total. Expansion team would be a lot less, more like $700 million.

 

[Larry David]

Now that's a good case. This team isn't going to Seattle unless there is a sale. With all of the debt on the team, I don't think the Maloof will sell for less than $425.

But I think Hansen group is the only people that will pay close to the price the Maloofs need.

I wouldn't put it past the Hansen group to wildly overpay. But the other costs will be a big factor.

 

[JB_kings]

Hansen isn't going in $75-100 mil over market. He would still have to pay off the city bonds and pay the relocation fee. Plus he still has to get the arena done. So basically it would be around $1 billion total. Expansion team would be a lot less, more like $700 million.

Add to that Hansen would be buying a team that is said owes over 100 million for the NBA line of credit they tapped. If I was Hansen I would lobbying the heck out of Stern for an expansion team as my first option. Overpaying market value and then dealing with the fees and debt are a tough burden to bear even for the filthy rich. They still also have to put in hundreds of millions for their new arena and find enough revenue ongoing to operate a team and pay back Seattle for their bonds.

 

[kennadog]

In a recent article in the Bee, the King's debt was estimated at a total of $200 million. I believe that includes the $76 million owed to Sacramento, which is mostly collateralized by the arena and only a little bit by the team. Still it has to be paid off for the team to move.. The NBA loan is collateralized by the team only.

Anyway, you can see what the problem is for the Maloofs. Since the debt is $200,000 and the team can't be worth much more than what was paid for the Grizzlies, they aren't going to get much actual money (they only get about 52%, I think, as well.)

And when talking about what NBA owners will or won't approve, remember that the owners of 48% of the Kings want to stay in Sacramento. So that 48% would like to see another owner take over that favors Sacramento. Of course, the Maloofs are the majority owners.

So does Hansen's group want to wildly overpay and have to pay a relocation fee? And Seattle's arena is at least 2-3 years from completion.

And we don't even know who the 2 or 3 possible buyers are that want to keep the King's in Sac. One is almost certainly Burkle, but he is not the only one. And as a potential buyer for the Kings is likely to be someone who will go for a deal with the city on a new arena, then that's the jackpot.

Last, I don't think the Maloofs can afford to fund their side of a lawsuit, especially with no guarantee they would win.

I'm just not going to concede that we'll lose our team to Seattle. I don't think its anywhere near a done deal. And I think Seattle is exactly why Stern dangled the possibility of an expansion team.

 

[VF21]

Hansen and his group didn't get to be where they are by wildly overpaying for anything. They aren't going to do it for the Kings.

 

[nbaFan]

The Maloofs have made out just fine. Even though there is 200 mill in debt they only owe 52% of that. So if the final sale price thats announced is 435 million to Hansen they will walk away with nearly 120 million plus proceeds of 52% of arco/land. What i dont know is if they are carrying a loan still from their initial purchase. Im sure details will be released when the sale is actually announced. What doesnt make sense is why they would announce now instead of march. Take with grain of salt of course

 

[JB_kings]

The Maloofs have made out just fine. Even though there is 200 mill in debt they only owe 52% of that. So if the final sale price thats announced is 435 million to Hansen they will walk away with nearly 120 million plus proceeds of 52% of arco/land. What i dont know is if they are carrying a loan still from their initial purchase. Im sure details will be released when the sale is actually announced. What doesnt make sense is why they would announce now instead of march. Take with grain of salt of course

Not true. The debt was incurred by majority shareholders only. Minority owners get no revenue or debt from the ongoing operations or team sale. The minority shareholders had no involvement at all. Just forget that there are minority shareholders for anything to do with selling the team.

 

[Larry David]

\

And Seattle's arena is at least 2-3 years from completion.

You make a lot of great points in your post, but this won't be an issue.

Key Arena can and would host NBA games while they build the new one.

It's very unclear if Hansen can make a deal and get the move cleared by the NBA, but if so, the are the Sonics next season and playing in Key Arena until they move into the new place. No lame duck seasons here.

 

[macadocious]

Not true. The debt was incurred by majority shareholders only. Minority owners get no revenue or debt from the ongoing operations or team sale. The minority shareholders had no involvement at all. Just forget that there are minority shareholders for anything to do with selling the team.

What? That makes no sense. If you don't get any revenue or dividends, what is the point of owning?

 

[Section 101]

What? That makes no sense. If you don't get any revenue or dividends, what is the point of owning?

You get to sit in meetings. Hang out at the games. Have some insider information.

What's the point in owning stocks? Sure you get to vote on somethings, but it's not like you can walk into apple and ask for a stockholder tour of secret stuff.

 

[macadocious]

You get to sit in meetings. Hang out at the games. Have some insider information.

What's the point in owning stocks? Sure you get to vote on somethings, but it's not like you can walk into apple and ask for a stockholder tour of secret stuff.

Voting
Dividends
Appreciation

 

[Larry David]

Voting
Dividends
Appreciation

This alone. Look at where the values have gone. Those owners have made money.

 

[JB_kings]

To put in perspective, the percentages are misleading. One percent of majority ownership could be worth 6.5 million dollars while one percent of minority ownership could be worth 500,000 dollars.

The original minority ownership was a very small cash contribution and mostly any value in that is largely just bragging rights and a decent reward for such little investment if they choose to sell it later.

Gregg Lukenbill and Joe Benvenuti were the majority partners in the Sacramento Sports Association. And actually Benvenuti owned about 50% to Lukenbill's 33% although Gregg was the front man. The rest of the minority owners like Bob Cook, etc. put in very little cash.

We aren't talking the deep pocket billionaire owners of today. The purchase price of the KC Kings was 10.5 Million dollars... yes that's right, 10.5 million with an M. The first thing the SSA had to do was build Arco I and that cost over 12 million. And then almost immediately after Arco I was up and running they had to build Arco II which was about another 50 million. Their pockets went sort of empty by the time Arco II was privately financed at some gawd awful construction loan double digit interest rate that tripped up every Kings owner until 1997 when the infamous loan from the city paid off those construction loans.

If that didn't set the ownership path to trouble, Lukenbill really doubled down and sunk his own position. Gregg was not a basketball fan. To him the Kings were the key to unlock his North Natomas farm land purchase into commercial and residential development. The mayor back in the mid 80's was Ann Rudin and she held sway over the council and would not bend to Lukenbill and Benvenuti wishes to rezone the land. The purchase of an NBA team would sway her council support over to the SSA side.

Lukenbill's true sports desire was baseball in Sacramento. Even before Arco II opened it's doors, Lukenbill was obsessed with bringing MLB to the city and getting a stadium built. He started off selling his shares in the Kings for cash to fund his stadium. Even going hard after Al Davis and the Raiders.

All failed though and once the SSA saw the writing on the wall that the NBA player contracts were exploding and they couldn't keep up with the bills, they sold off the majority ownership to Jim Thomas and his partners. Lukenbill cashed out and Benvenuti exchanged his majority shares for minority shares and cash.

That's why the minority ownership now looks like it has such a big percentage chunk, but in reality it is not valuable as the majority ownership.

 

[JB_kings]

This alone. Look at where the values have gone. Those owners have made money.

I don't really like the stock analogy. The only investment value is resale of the minority shares. There are no "dividends" or revenue paid to the minority shareholders. There are also no debts either. They have no voting rights in the running of the team. Their role is largely cosmetic value to them. So any debt or revenue coming from the ongoing operation of the team and arena are solely for the majority shareholders. This is why the minority share values are not one to one in value with majority.

It's more like this: A majority share allows you to buy a Ferrari Daytona to drive every day and reap the benefits from the appreciation in value. A minority share entitles you to get your picture taken while sitting in the drivers seat. But nobody will ever hand you a key. The only people interested in buying the minority share is the next guy willing to pay for your rights to sit in the seat.

 

[macadocious]

I have never heard of such a bizarre ownership structure in any business in my life. Are NBA teams, LLP's, MLP's? I really have no idea.

 

[JB_kings]

It's a unique animal for sure. Take Jay Z and his involvement with the Nets. He owns such a trivial percentage of the team. But you would not guess that. He uses that rep as part owner and mega entertainer to elevate his standing as an owner with the public and players. It was a shrewd move on his part and Prokhorov because he gives the Nets a familiar popular public face where Prokhorov is very unfamiliar. So he maximized that cosmetic value more than most.

As for the Kings, it didn't start out to be such a misleading split. That's why I gave the history on the ownership. The original SSA majority partners held almost 85 % of the team. But as it evolved, the selling off of shares to raise cash really distorted things.

 

[macadocious]

Well I have just never seen a structure where owning 5% doesn't mean you own 5%.