Hansen, Seattle Council reach deal on financing new sports arena

[rainmaker]

http://www.king5.com/news/arena/Han...-on-financing-new-sports-arena-169272086.html

Multiple Sources confirmed Monday that a deal has been reached between the Seattle City Council and the investor group led by Chris Hansen on the financial terms that would put a new sports arena near Safeco Field.

A key, multi-million dollar concession by Hansen that could see his investor group spend more out of pocket to build the arena appears to have brought reluctant councilmembers onboard with the project. City Council members are expected to make an official announcement outlining the terms of the agreement on Tuesday.

Transportation lies at the heart of the revised agreement. In the Memorandum of Understanding entered into earlier this year with Seattle Mayor Mike McGinn and King County Executive Dow Constantine, Hansen pledged $290 million of private money to build the NBA/NHL facility in SODO. That original plan envisioned the city and county

issuing $200 million in bonds to finance the remaining costs of the project (a one-team scenario would have involved only a $120 million investment by the city and county). Hansen pledged that arena revenue would be sufficient to pay off the bond debt, thus resulting in no risk to taxpayers.

Not good. Didn't Hansen already reportedly offer 400M for the Kings? This could very well cause him to up the ante. My biggest fear is the Maloofs wanting to screw Sac over, and selling only to a buyer who either is out of state, or intends to move the team.

Tired of this sh**. Less excited about this season than any since I became a fan in 94 after moving from NY. It's all just taken it's toll, and it obviously is nowhere near its end.


Edit: There's this

Rob McAllister ‏@Rob_McAllister
As Ive written before George Maloof says Stern said its $150 million to move Kings. That could change of course but that's quite a large sum

But i'm nervous. Hansen wants a team and has the pockets to get it done, along with an arena plan, now.

 

[VF21]

Tired of this sh**. Less excited about this season than any since I became a fan in 94 after moving from NY. It's all just taken it's toll, and it obviously is nowhere near its end.

I agree with being more than tired of all this stuff. I'm still excited about the season, though. I refuse to give up on the Kings until I have no other choice. The Maloofs on the other hand? They can rot in Hades for all I care.

 

[kingjatt]

The part that worries me the most is that this situation is much different than the Anaheim situation, although Stern would hate to lose Sacramento and it would create a blemish, he would also be righting a wrong by giving Seattle a team again and he could rely on the positive light created from that story to overshadow the negativity towards Sacramento from a national media standpoint.

and if we somehow keep our team away from Seattle the goofs could just wait out KJ's term while ARCO falls apart then file for relocation with an actual case.

It just seems to get worse and worse....

 

[Capt. Factorial]

He still needs a team. He's not building this arena to give the Maloofs free rent, he's building it for his own team. Thing is 1) the Kings aren't for sale, 2) there's no indication the NBA has given up on Sacramento (as opposed to the Maloofs) meaning they would likely only approve a local sale if 1) changes.

Not time to panic yet.

 

[kennadog]

Not panicking yet. Just a bit broken-hearted that the deal Sacramento offered the Maloofs is better than what Seattle's giving Hansen. Just shows once again that Sacramento is stuck with the worst owners in the league. The only thing wrong with the Kings + Sacramento is the freakin' Maloofs.

 

[Bricklayer]

He still needs a team. He's not building this arena to give the Maloofs free rent, he's building it for his own team. Thing is 1) the Kings aren't for sale, 2) there's no indication the NBA has given up on Sacramento (as opposed to the Maloofs) meaning they would likely only approve a local sale if 1) changes.

Not time to panic yet.

The danger/question for Hansen is if he could/would offer so much money that a broke family might see it as a godsend/way to reboot their wealth. Ironic PT #1 is at this point that it may end up critically important for Sacto fans that the Maloofs DON'T want to sell, after years of fans dreaming of them doing exactly that.

Note however that the league office (actually think its owners through the league office) has wide powers as far as approving or not approving purchases. If Stern really didn't want to lose Sacto, he could just say no to Hansen's bid. I do agree with the poster above though that it being Seattle could soften Stern's resolve, or that he could be so happy to end the stupidity and get rid of the Maloofs he could acquiesce. That would mean the end of the Royals/Kings franchise however, as Seattle still owns the Sonics name and records and will be waiting to slap them on any new franchise to show up. So again, not something I think he is eager to do. Which brings up Ironic Pt#2, almost as popular as wishing the Maloofs would sell is bashing Stern, and yet a major danger moment for Sacto is when Stern steps down and passes the baton to a successor who may not be as committed to saving Sacto.

 

[Trueblood]

The danger/question for Hansen is if he could/would offer so much money that a broke family might see it as a godsend/way to reboot their wealth. Ironic PT #1 is at this point that it may end up critically important for Sacto fans that the Maloofs DON'T want to sell, after years of fans dreaming of them doing exactly that.

Note however that the league office (actually think its owners through the league office) has wide powers as far as approving or not approving purchases. If Stern really didn't want to lose Sacto, he could just say no to Hansen's bid. I do agree with the poster above though that it being Seattle could soften Stern's resolve, or that he could be so happy to end the stupidity and get rid of the Maloofs he could acquiesce. That would mean the end of the Royals/Kings franchise however, as Seattle still owns the Sonics name and records and will be waiting to slap them on any new franchise to show up. So again, not something I think he is eager to do. Which brings up Ironic Pt#2, almost as popular as wishing the Maloofs would sell is bashing Stern, and yet a major danger moment for Sacto is when Stern steps down and passes the baton to a successor who may not be as committed to saving Sacto.

This.

I've been pretty much echoing this sentiment for the past week. It all comes down to where the NBA stands. Does losing the Maloofs, bringing in a strong new ownership group and righting the wrong that was done to Seattle equal or outweigh screwing over a fan base and market that they have high regards for?

If the Maloofs decide that they want to sell and Hansen's group has the highest bid, where do we stand legally? One train of thought is that since Sacramento came up with an arena plan, Stern wouldn't let them leave. He'd force them to stay at Arco or sell to a local buyer. But that's just speculation.

What if the Maloofs say that a $425 million sale makes more financial sense than going to a railyards arena where they would just be rent paying tenants?

At that point, if the league rejects the sale, will they have a strong legal case against them?

Does the league even want to risk the prospect of drawn out litigation when there would hypothetically be an easy option to just get rid of the Maloofs altogether?

And yes, the owners were unified against the Maloofs when the option was Anaheim. Will they be as unified now? Anaheim kept the Maloofs in the game. Seattle gets them out of the club. Big difference.

 

[JB_kings]

Maybe there is a simple solution that allows all the cities to win?

Give expansion teams to Seattle and Virgina Beach. This allows for new money to come into the league for both the players and owners. More jobs for players and a likely PR black eye for relocation turns into a positive. Sure there will be purists in the media who will complain of too many teams watering down the talent of the league, but that stuff will not get a lot of attention.

The best part is that it isolates the Maloofs a bit more and takes away their threat options. They either have to work it out in Sacramento or sell to someone who can work it out. This isn't really a wishful thinking on this fan's part. The NBA has a legit Maloof problem and they want them gone - period. They don't want them going into another market with their same tired act. Stern learned a lesson on handling George Shinn and I think he can box them in here.

 

[HereWeBoogie]

crap, this is not good

 

[HereWeBoogie]

=(

 

[Larry David]

The NBA isn’t expanding. With Seattle poised accept a new team and serving as a blemish on the league’s record, it’s unfathomable that any NBA team could get the votes needed to relocate anywhere but Seattle. So, the options for any NBA owner looking to move appear to be: (1) work out a deal in your city; (2) sell to Hansen, who’s prepared to pay over market; or (3) make a big enough offer that Seattle would consider letting you step into Hansen’s role in the proposed Sonics deal (as you own an NBA team and he doesn’t).

Option 3 is clearly not on the table for the Maloofs, perhaps not for anybody if Seattle has any ethics. The Maloofs have been indecisive on what they want to do and where they might want to go. Now, the “where might we go” is basically off the table.

The Maloofs options seem to be limited to: (1) try to revive the same arena deal they just killed here; (2) sell to Hansen; or (3) play out the string here in Sacramento without a new arena and see where that goes. George’s deadline to obtain the funds necessary to buy back a chunk of the Palms is coming up. Sister is now getting divorced. The Maloof nuked every bridge here. The Maloofs can’t afford to move to team to Seattle and Hansen/Seattle/ and maybe the NBA lined up the Sonics deal that puts up a major wall for the Kings to move to any other city. With the Maloofs anything is possible and Joe and Gavin really like being NBA owners, but somebody with NBA is going to explain their options and Hansen is going to offer well above market. I think this team gets sold to somebody shortly before the All-Star game.

If so, the question becomes whether Hansen wins or the Maloofs sell to somebody like Burkle that would want to keep the team here. While the Maloofs don’t like the city, the team will go to the top bidder. If Burkle matches Hansen’s last offer, you’d have to think the NBA will push to keep the team here and use Seattle as the NFL’s version of Los Angeles. I think Sacramento either gets a new owner and arena green lit or loses the team fairly soon. The Maloofs are now just out of options.

If I had to guess, this team is headed to Seattle after this season. They will play in Key Arena until the new facility opens. The deal will be structured where the Maloofs can’t exercise any legal rights walk away from the loan on Arco and the city gets to keep the Kings name, colors, records, ect … in the event a team ever comes back along. That’s all last spring buys us.

 

[Capt. Factorial]

If I had to guess, this team is headed to Seattle after this season. They will play in Key Arena until the new facility opens. The deal will be structured where the Maloofs can’t exercise any legal rights walk away from the loan on Arco and the city gets to keep the Kings name, colors, records, ect … in the event a team ever comes back along. That’s all last spring buys us.

Larry, Larry. Ever the pessimist. It's really hard to imagine that Hansen can outbid Burkle, for the simple reason that Hansen will have to pay a huge chunk more upfront. If Hansen buys the team, he has to pay off the city loan immediately (~$70M) and he has to pay a relocation fee (almost certainly no less than $30M, rumors range up to $150M). That's $100M-$220M up front costs that Burkle doesn't have. On top of that, Hansen will have to provide $290M in private investment to build the arena and will be on the hook for another $200M in 30 years (city can force Hansen to purchase the arena). That's a serious chunk of change. Burkle, on the other hand, would be on the hook for only the regularly-scheduled loan payback and (if I'm remembering correctly) $70M upfront on the arena.

For simplified numbers, it's Burkle ($70M upfront, $70M scheduled) vs. Hansen ($400-500M upfront, $200M backend). Who can make the more competitive offer on team ownership?

 

[Larry David]

Larry, Larry. Ever the pessimist. It's really hard to imagine that Hansen can outbid Burkle, for the simple reason that Hansen will have to pay a huge chunk more upfront. If Hansen buys the team, he has to pay off the city loan immediately (~$70M) and he has to pay a relocation fee (almost certainly no less than $30M, rumors range up to $150M). That's $100M-$220M up front costs that Burkle doesn't have. On top of that, Hansen will have to provide $290M in private investment to build the arena and will be on the hook for another $200M in 30 years (city can force Hansen to purchase the arena). That's a serious chunk of change. Burkle, on the other hand, would be on the hook for only the regularly-scheduled loan payback and (if I'm remembering correctly) $70M upfront on the arena.

For simplified numbers, it's Burkle ($70M upfront, $70M scheduled) vs. Hansen ($400-500M upfront, $200M backend). Who can make the more competitive offer on team ownership?

I hope you are right. I think the math might be off. I think the fee to move will still be 30 and the higher numbers were floated to keep the Kings out of Anaheim.

The 70 million loan is the same either way. Either Burkle or Hansen will factor that into their bid and the Maloofs will have to pay it off as part of the sale (in Burkle's case, they wouldn't need to pay it off until they moved downtown ... but it's in the bid.)

Hansen's Seattle arena numbers are sunk costs that he knows about to get a team. I think the relocation fee will be 30 million, but whatever it is ... Hansen's in. To get the deal he badly wants off the ground and probably get an NHL team to follow, he needs to out bid others for the Kings. I don't think he's waiting on the Bucks or Bobcats.

In the end, it just comes down to what Hansen or Burkle want to spend. They can both bid many many many times past what the team is worth. The up front costs matter, but don't limit Hansen's drive.

If I had the money, I think I could make more money in Seattle in an arena that I owned with an NHL team as my tenant, than in Sacramento as a tenant in the city's arena. And if Burkle wants to own the new Sacramento arena, the numbers are closer. But we'll see

I hope you are right. I think a sale is coming.

 

[HereWeBoogie]

ideal scenario: the maloofs decide to sell now that they realize a bidding war is gonna lead to the team being bought for way more than its worth, Burkle wins the bidding, keeps the team here, and we have a fresh new rich owner
Next best scenario: Maloofs tell all bidders to screw off, and the team stays here, working with renovated Arco arena, and a possible arena deal in the future.
last scenario: Bye Bye kings, Seattle gets the NBA franchise a lot of people think they deserve.

 

[JB_kings]

Burkle will not match Hansen because Burkle was looking to pick up the team without much risk on the purchase. His risk was all in the planned arena deal. He planned on paying off the Maloofs cheaply and swooping in with very little cash out of pocket. It's going to take about 450 million and that is where Hansen's group is going to get the team. They are going to overpay for the team and later on worry about the crushing debt that will put them in red ink for a very long time. But the fact is that they are willing to take that on just to get a team back there. I thought that somehow this reality would dawn on them and then find a way to put that debt on the city of Seattle which would kill their deal. I know everyone loves to think of billionaires tossing out money like it's toilet paper, but the reality is they are smart men that don't throw money at something unless they are damn sure that more money is coming back at them long term. Hansen is really a nobody in terms of money - but Balmer is the guy who can go long term like this.

This is just a matter of time before Hansen reaches a number George wants. Unless Joe and Gavin grow a pair and tell George to stop his madness of tossing the last of their money down into the Vegas Pit.

But Sonic fans shouldn't be doing the happy dance. The team will come with MASSIVE debt incurred from the transaction. You really think that these wonder boys are just going to write that off, you are dreaming. They are working just as hard to push that debt onto the city as they are at finding a team. No free rides...

 

[HereWeBoogie]

interesting read

http://probasketballtalk.nbcsports....-kings/?utm_source=dlvr.it&utm_medium=twitter

 

[VF21]

=(

Oh please. The sky hasn't fallen yet. This is just wrong, IMHO. Between you and Larry David, it might look to outsiders like we all think the Kings are gone already.

 

[bajaden]

interesting read

http://probasketballtalk.nbcsports....-kings/?utm_source=dlvr.it&utm_medium=twitter

You beat me to it. I was just about to post this article. I think he makes some good points why the Kings won't be going to Seattle. Especially the point that after paying off the league, and the city of sacramento, the league could or would impose a relocation fee up to 150 million dollars on top of the 400 million Hansen is paying for the team. That would mean that his investment in purchasing the Kings could exceed 500 million dollars. When you add in the amount he's forking over for the arena, he could be up to close to a billion dollars, just to purchase an NBA team. Point being, is that someone like Burkle could buy the team for a lot less up front money, and less investment in an arena.

As for expansion, I don't think its out of the question. Right now there are at least 5 cities that are interested in having an NBA team. I'm sure the players union would be all for it. So I don't think its an idea I would just toss aside.

 

[Larry David]

The NBA put up a 150 million dollar road block to try to keep the Kings out of So Cal and compensate the other two LA teams.

Why do they want to block a team cleaning up the Seattle mess? No other teams in the city. This is more like moving to CHA or NO than Anahiem, which were 30. It used to be something like 10.

For Seattle, it's going to be closer to 50 than 150, IMO

 

[Larry David]

Stern has come out several times against expansion. The NBA over expanded and was very watered down for a while. A huge influx of global talent has finally helped fix that but it's closer to right than ready to expand again. The NBA has issues in Sacramento, Charlotte, and Milwaukee. It’s tougher to get new arenas because the cities lining up for NBA teams are all second tier, as compared to before the late 80s and 90s expansion boom.

A lot of owners in the late 80s, decided to cash out by creating cash with expansion teams. The current owners aren’t looking to slice the TV money any thinner for a one time infusion of cash. A lot of owners would support contraction before expansion. Expansion is nowhere on the horizon for the NBA owners.

 

[Capt. Factorial]

Oh please. The sky hasn't fallen yet. This is just wrong, IMHO. Between you and Larry David, it might look to outsiders like we all think the Kings are gone already.

Besides, any team moving to Seattle will be called the "Supersonics" once they get there.

 

[Trueblood]

Larry, Larry. Ever the pessimist. It's really hard to imagine that Hansen can outbid Burkle, for the simple reason that Hansen will have to pay a huge chunk more upfront. If Hansen buys the team, he has to pay off the city loan immediately (~$70M) and he has to pay a relocation fee (almost certainly no less than $30M, rumors range up to $150M). That's $100M-$220M up front costs that Burkle doesn't have. On top of that, Hansen will have to provide $290M in private investment to build the arena and will be on the hook for another $200M in 30 years (city can force Hansen to purchase the arena). That's a serious chunk of change. Burkle, on the other hand, would be on the hook for only the regularly-scheduled loan payback and (if I'm remembering correctly) $70M upfront on the arena.

For simplified numbers, it's Burkle ($70M upfront, $70M scheduled) vs. Hansen ($400-500M upfront, $200M backend). Who can make the more competitive offer on team ownership?

We need to keep in mind that Hansen's ownership group includes some of the wealthiest people in the northwest. Steve Ballmer and Peter Nordstrom are going to be part of his group and can probably front some more cash that they may or may not expect Hansen to take care of on the back end.

 

[JB_kings]

We need to keep in mind that Hansen's ownership group includes some of the wealthiest people in the northwest. Steve Ballmer and Peter Nordstrom are going to be part of his group and can probably front some more cash that they may or may not expect Hansen to take care of on the back end.

I agree that Balmer and Nordstrom are strong backing to have. But ponder where were they when the Sonics were up for sale? These guys didn't suddenly come into big money. They stayed out of this for a long time when they knew the Sonics were in trouble years back.

The little voice in the back of my head says that Hansen is out front of this way more than the real heavyweight names. And if he is, Seattle should be very concerned because Hansen is relatively poor when compared to most NBA ownership. He does not have wealth to write the kind of checks to buy and move the Kings.

So if Balmer and Nordstrom are the real finance guys for buying a team, then the absolutely expect a return. I think it's getting lost in a shuffle that Hansen really isn't a big player. He is nothing without those other names. And those other names did not become billionaires by writing big checks and expecting nothing in return. They got rich by getting other people to write big checks to them. This is a very important distinction because their ownership group is being portrayed as motivated to get a team at all costs. There is very real and massive debt involved in buying the Kings to move them. Hansen, Balmer and Co. can go long, but more likely they will be working behind the scenes to shift the debt to the public at some point.

If they pull this off, it's something close to a billion dollars to get an NBA and NHL team and build a new arena for Seattle. With all that debt coming on their ownership group and the iron clad deal to make sure the city backed bonds are paid first, where is the revenue coming from to run the teams? It's getting whitewashed by the billionaire star names, but I'll buy a round of drinks at Starbucks for the entire city of Seattle if those guys write checks without a fair return.

 

[Larry David]

The story posted, which is great, lists two optionsfor the Maloofs – sell or revive the arena deal they just killed. I initially thought that was a practical option, but really, after destroying thefan base and every bridge in town …how could they be profitable owners for aproperly funded team? And even if they could make a modest profit each year,how would one ever clear 170 million of debt on the franchise, plus the loan

The Maloofs have to sell at some point. If they arestupid, it’s just a matter of when they implode. If they have any brains,they’ve been waiting for Seattle to bid versus Sacramento’s top bidder, who maybe Burkle. I really hope Sacramento wins. Keeping the Kings without the Maloofwould be sweet. Objectively, I think Seattle is a more logical bet.

 

[Chupacabra]

Why hasnt there been an attempt to raise the difference that the maloofs didnt agree to pay in the original deal? Ill knock $5 off of it right now.

 

[Capt. Factorial]

Why hasnt there been an attempt to raise the difference that the maloofs didnt agree to pay in the original deal? Ill knock $5 off of it right now.

Great. If we can just get 1.399999 million more people to give $5, that will get us up to the $7M in predevelopment costs that the Maloofs didn't want to pay. Only $70M more to go!

(So, erm, that's why. It doesn't work logistically.)

 

[Mike0476]

Great. If we can just get 1.399999 million more people to give $5, that will get us up to the $7M in predevelopment costs that the Maloofs didn't want to pay. Only $70M more to go!

(So, erm, that's why. It doesn't work logistically.)

As someone suggested at a city council meeting, we could sell T-shirts or cupcakes like a school fundraiser.

 

[bajaden]

The NBA put up a 150 million dollar road block to try to keep the Kings out of So Cal and compensate the other two LA teams.

Why do they want to block a team cleaning up the Seattle mess? No other teams in the city. This is more like moving to CHA or NO than Anahiem, which were 30. It used to be something like 10.

For Seattle, it's going to be closer to 50 than 150, IMO

And you know all this how? What preytell do you accomplish by solving a problem or mess as you call it in Seattle, while at the same time creating the exact same mess in Sacramento. Thats sort of like borrowing from Peter to pay Paul. Why would Seattle's mess take precedent over Sacramento's mess. Both scenario's are almost exactly the same. The difference is, the city of Sacramento actually came up with a plan for a new arena, whereas Seattle didn't.

 

[kennadog]

And you know all this how? What preytell do you accomplish by solving a problem or mess as you call it in Seattle, while at the same time creating the exact same mess in Sacramento. Thats sort of like borrowing from Peter to pay Paul. Why would Seattle's mess take precedent over Sacramento's mess. Both scenario's are almost exactly the same. The difference is, the city of Sacramento actually came up with a plan for a new arena, whereas Seattle didn't.

Actually, it would be a worse mess in Sacramento, because this was a city with a better arena deal for the Kings, than the one Hansen's getting in Seattle. The City of Seattle practically shoved their team out the door, by refusing to fund an arena at all, although I understand why. They had already built a new football and a new baseball stadium. They were worn out.

If the Maloofs indicate a willingness to actually sell the team, I think the league will give every financial edge they can give to to a buyer who wants to keep the team here and will agree to the arena deal on the table. It would be the best outcome for the league. And There are buyers willing to keep the Kings here. There's no talk, because the Maloofs have steadfastly said they will not sell the team. That all changes, though, if they start negotiating with anyone to actually sell the team.

 

[Mike0476]

If I had to guess, this team is headed to Seattle after this season.

If I had to guess, the Sacramento Kings will still be the Sacramento Kings.