Maloofs Owe NBA $75-million, Brothers Unsure How Many "Yes" Votes They Have To Reloca

ReinadelosReys

ReinadelosReys

Starter
#1
#1
The Maloofs' obligations extend further than the $77-million loan the Kings owe the City of Sacramento. KFBK has learned that the majority owners have also taken out a line of credit with the NBA for roughly $75-million.

Kings' spokesman Mitch Germann said the team used the line of credit. However he would not confirm nor deny the current balance. "As a privately held company, the team does not release specific financial figures."

......

Sources have told KFBK that an approximately 200-page document outlining the Kings move to Anaheim currently sits on NHL Ducks Owner and Honda Center operator, Henry Samueli's desk. Just last week lawyers were combing through the finer details of the deal. Honda Center officials would not confirm if Samueli had signed off on the agreement.

Those close to the negotiations say Samueli and the Maloofs are not sure they have enough support from the rest of the league's owners to approve the move. Kings officials have said all four Maloof brothers will be attending the NBA Board of Governors' meetings this week in New York City to try and convince at least 15 other teams to allow the Kings to relocate.

http://www.kfbk.com/pages/robmcalliste.html?article=8425522
 
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Siranthony

Starter
#2
#2
ReinadelosReys said:
The Maloofs' obligations extend further than the $77-million loan the Kings owe the City of Sacramento. KFBK has learned that the majority owners have also taken out a line of credit with the NBA for roughly $75-million.

Kings' spokesman Mitch Germann said the team used the line of credit. However he would not confirm nor deny the current balance. "As a privately held company, the team does not release specific financial figures."

......

Sources have told KFBK that an approximately 200-page document outlining the Kings move to Anaheim currently sits on NHL Ducks Owner and Honda Center operator, Henry Samueli's desk. Just last week lawyers were combing through the finer details of the deal. Honda Center officials would not confirm if Samueli had signed off on the agreement.

Those close to the negotiations say Samueli and the Maloofs are not sure they have enough support from the rest of the league's owners to approve the move. Kings officials have said all four Maloof brothers will be attending the NBA Board of Governors' meetings this week in New York City to try and convince at least 15 other teams to allow the Kings to relocate.

http://www.kfbk.com/pages/robmcalliste.html?article=8425522
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Wow! It also says something like 50% of NBA teams are struggling.

I don't know why the Kings would need to borrow that much money. It was just a couple of years ago they they still had the Monarchs etc. It looks like the whole league is hurting in this economy.

Lending money to strugling teams is a bad idea unless the league wants to own most of them eventually. Revinue sharing needs to happen now!

Also a real salary cap or salary restructuring needs to happen. How can Dallas afford 97 mil a year in salary? Keven Martin makes 11 mil a year and can't pay for his house. Player salaries are out of touch with reality in todays world.
 
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bozzwell

bozzwell

Starter
#3
#3
$77 mil owed on a note to Sacramento
$75 mil line with the league
$75 bond issue in Anaheim to help the move

Robbing Peter pay to Paul - $75 millions at a time.

Shinn got bought out by the league for being under much less financial disress then that.
 
hrdboild

hrdboild

Moloch in whom I dream Angels!
Staff member
#5
#5
bozzwell said:
Shinn got bought out by the league for being under much less financial disress then that.
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Yeah no kidding. Maybe this all comes down to a personal relationship between Samueli and David Stern and they both see it as a way to get him into the league as an owner. The arena deal is obviously essential, but perhaps we need to be more worried about finding a new owner who wants to keep the team in Sacramento. How that's going to happen, I don't know.
 
ElRey

ElRey

Starter
#7
#7
Makes you wonder why don't the Maloofs just sell the team if they can't afford to keep the team in Sacramento anymore. I'm not sure moving the team to Anaheim is going to help them recover financially that much, given all their financial troubles of late with their other endeavors.
 
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fnordius

All-Star
#8
#8
Nifty.

They bought the team for $156M ($287M in 2011 inflation-adjusted dollars). Forbes says it's now worth $293M, so if you deduct the $152M they owe, there's $141M in equity. They're miles from being able to think about selling and breaking even. They could have locked all their cash in a closet for 13 years and been much better off.

I wonder if this generation of Maloofs can keep any business afloat without huge subsidies?
 
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JB_kings

Starter
#10
#10
fnordius said:
Nifty.

They bought the team for $156M ($287M in 2011 inflation-adjusted dollars). Forbes says it's now worth $293M, so if you deduct the $152M they owe, there's $141M in equity. They're miles from being able to think about selling and breaking even. They could have locked all their cash in a closet for 13 years and been much better off.

I wonder if this generation of Maloofs can keep any business afloat without huge subsidies?
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Remember there are minority owners to consider too. So they don't own 100% of the team. I think they are around 55-60 percent owners. So if they sold their share of a team worth about 300 million, they would only get maybe $180 million max before they start talking debt. Unless you are selling to someone like Larry Ellison and he pays them say 150 million in cash and assumes all the debts. Not hard to picture the Maloofs being upside down in their own franchise.
 
Gary

Gary

All-Star
#11
#11
Freaking A... JUST SELL THE TEAM ALREADY AND KEEP THEM IN SAC...

Why they are trying to make money on an NBA team is just beyond me. This has to be the WORST investment idea ever. Teams are for the rich with money to throw around, not fringe millionaires that are living as close to bankruptcy as the Maloofs are.
 
Dr. Spaceman

Dr. Spaceman

Bench
#12
#12
Gary said:
Freaking A... JUST SELL THE TEAM ALREADY AND KEEP THEM IN SAC...

Why they are trying to make money on an NBA team is just beyond me. This has to be the WORST investment idea ever. Teams are for the rich with money to throw around, not fringe millionaires that are living as close to bankruptcy as the Maloofs are.
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Seems like those reasons you're looking for are also within their intentions to move down to Anaheim: it's a status issue and some faint hope that the prosperity and glamour that comes with the area will impart some of its fortunes upon them. They sold off their most stable business in order to barely retain the two worst businesses they could own in a recession. They've rapidly revealed themselves to be awful business minds in the last couple of years.
 
ArcoKings

ArcoKings

Starter
#13
#13
And I thought I HAD money problems. The Palms expansion sunk them bad. If they didn't build they'd still have the beer distributorship and the Palms Casino/Hotel at the absolute worst would be breaking even. All the major casinos in Las Vegas are losing money and those are public companies with stock holders. The Maloofs are independent. I'm surprised they've lasted this long.
 
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pupsingh

Bench
#14
#14
who says that they have to pay the 75 million to the nba before they move? why cant they just pay that after they move and start making more money? if thats the case then thats a non issue, the issue would be though that they are unsure of the votes
 
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JB_kings

Starter
#15
#15
They show some typical signs of habitual gamblers. They take big risks and lose - then take even bigger risks to dig out of the hole. No success stories here. The signs are all there of massive debt to a number of individuals. Sold off value holdings to prop up sink hole business. Borrowing even more to make that move up to the big market... and traded away all their assets in the team hoping that future windfalls will save the day.
 
J

JB_kings

Starter
#16
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pupsingh said:
who says that they have to pay the 75 million to the nba before they move? why cant they just pay that after they move and start making more money? if thats the case then thats a non issue, the issue would be though that they are unsure of the votes
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It is an issue. Say you buy a house with a mortgage. There is a big upswing in housing prices and you take out that equity in loans to keep the house up and maybe pay off some high interest debt. But then the housing crash comes and suddenly you owe more money than your house is worth. And as part of that crash, your salary drops dramatically and you don't have enough to pay off all those loans. So you get further and further behind and hope they don't foreclose on you before you get a chance to recover.

If the Maloofs succeed in moving. Samueli goes to #1 on the payoff list for his loan. The NBA loan is secondary after they receive their relocation fee. Sacramento gets to go suck on an egg and take it to litigation. They can float along unless they miss a payment to Samueli. If that happens, the acceleration clause kicks in and they are toast. They will probably have to declare bankruptcy. And that is Samueli's chance to come in and in take the team in exchange for writing off the bond debt to him and paying off the NBA loan. So it's possible Samueli could own the team and only have put out a max of 125 million dollars. There might be some debate about how much the team borrowed from the NBA, but figure the 50 million bond plus the 75 million in debt. Sounds like a sweet deal for 55% controling ownership for an NBA team already in your own building!
 
A

Arena Skeptic

Bench
#17
#17
This really does confirm a lot of answers. The Maloofs can't afford the Kings or the Palms any more.

Samueli is poised to gradually -- or not so gradually -- take the Kings/Royals over. Kings fans are victims.

I'm all for Dave's call to stage a peaceful sit-in after the game tomorrow. Makes complete sense.

In spite of what people may think, I wanted the Kings to stay. But if the owners are broke, the team cannot stay. Everything we've seen so far has been calculated. I'll bet they have a decision on the move by May 1. And, we know what the decision is.

They're just going through the motions now.

Kings fans have an excuse to have any size (safe) bonfire they want now. The Maloofs may want to stay, but aren't you glad the City didn't get involved in a new arena for them? That would have been an albatross, for sure. Of course, this also means the City won't be seeing it's $77M any time soon. Great.
 
Jim Les

Jim Les

G-League
#19
#19
I'm gonna take a wild guess that the money borrowed from the NBA is for paying off the debts owed to the city of Sacramento (which would explain why the numbers are so close). My guess is that after they lawyer-ed up, they realized that they can't just walk away from Arco and give it back to the city and call it even. So they've just transferred their debts from Sacramento to the NBA. And I'll go one further and say that the NBA approved the loan, because David Stern is done with Sacramento. If I were going to the game, I'd probably steal a chair or something on my way out.
 
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ReinadelosReys

ReinadelosReys

Starter
#20
#20
Jim Les said:
I'm gonna take a wild guess that the money borrowed from the NBA is for paying off the debts owed to the city of Sacramento (which would explain why the numbers are so close). My guess is that after they lawyer-ed up, they realized that they can't just walk away from Arco and give it back to the city and call it even. So they've just transferred their debts from Sacramento to the NBA. And I'll go one further and say that the NBA approved the loan, because David Stern is done with Sacramento. If I were going to the game, I'd probably steal a chair or something on my way out.
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If I recall correctly, they already owe this money, not that they borrowed it just recently. A lot of teams have borrowed money from the NBA as most of them have not made money in years. Its only relevant right now given the circumstances.
 
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Livinthedream

All-Star
#21
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Jim Les said:
I'm gonna take a wild guess that the money borrowed from the NBA is for paying off the debts owed to the city of Sacramento (which would explain why the numbers are so close). My guess is that after they lawyer-ed up, they realized that they can't just walk away from Arco and give it back to the city and call it even. So they've just transferred their debts from Sacramento to the NBA. And I'll go one further and say that the NBA approved the loan, because David Stern is done with Sacramento. If I were going to the game, I'd probably steal a chair or something on my way out.
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How I read it is that the Maloofs already have a $75 million line of credit that has been used. It's not a new line of credit. If that's the case, they can't use it to pay off the city. Did I read it correctly?
 
Section 101

Section 101

All-Star
#22
#22
ReinadelosReys said:
If I recall correctly, they already owe this money, not that they borrowed it just recently. A lot of teams have borrowed money from the NBA as most of them have not made money in years. Its only relevant right now given the circumstances.
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Correct. They used $75 million already. It's a current debt not a future.
 
Jim Les

Jim Les

G-League
#23
#23
Kings' spokesman Mitch Germann said the team used the line of credit. However he would not confirm nor deny the current balance. "As a privately held company, the team does not release specific financial figures."
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http://www.kfbk.com/pages/robmcalliste.html?article=8425522


I interpreted that to mean that they did in fact pull out a loan, but the spokesman will not confirm or deny how much they have used. So I'm guessing that the reporter asked what they pulled the loan out for and how much of the loan they have left, and the spokesman did not answer. But the fact that it is so close to the dollar amount owed to the city of Sacramento and that this information came out after threats of litigation lead me to believe that the money will be used to pay back the city. That's just my hunch, though.
 
Section 101

Section 101

All-Star
#24
#24
Livinthedream said:
How I read it is that the Maloofs already have a $75 million line of credit that has been used. It's not a new line of credit. If that's the case, they can't use it to pay off the city. Did I read it correctly?
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They might be able to borrow $50 million to max out their credit with the league. But that would be a bad decision by the league. They would owe the league $125 million, plus the relocation costs over $23 million.
 
Section 101

Section 101

All-Star
#25
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Jim Les said:
http://www.kfbk.com/pages/robmcalliste.html?article=8425522


I interpreted that to mean that they did in fact pull out a loan, but the spokesman will not confirm or deny how much they have used. So I'm guessing that the reporter asked what they pulled the loan out for and how much of the loan they have left, and the spokesman did not answer. But the fact that it is so close to the dollar amount owed to the city of Sacramento and that this information came out after threats of litigation lead me to believe that the money will be used to pay back the city. That's just my hunch, though.
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They borrowed the money over a year ago though. Its gone. Why pay the interest on the loan if its not being used?
 
B

BMiller52

All-Star
#26
#26
Jim Les said:
http://www.kfbk.com/pages/robmcalliste.html?article=8425522


I interpreted that to mean that they did in fact pull out a loan, but the spokesman will not confirm or deny how much they have used. So I'm guessing that the reporter asked what they pulled the loan out for and how much of the loan they have left, and the spokesman did not answer. But the fact that it is so close to the dollar amount owed to the city of Sacramento and that this information came out after threats of litigation lead me to believe that the money will be used to pay back the city. That's just my hunch, though.
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No because they took out a line of credit with the NBA(I'm assuming the same one) back when it first became available a year or 2 ago.
 
Krunker

Krunker

Northernmost Kings Fan
#27
#27
Gary said:
Freaking A... JUST SELL THE TEAM ALREADY AND KEEP THEM IN SAC...

Why they are trying to make money on an NBA team is just beyond me. This has to be the WORST investment idea ever. Teams are for the rich with money to throw around, not fringe millionaires that are living as close to bankruptcy as the Maloofs are.
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In 2003, Forbes listed the Maloof family's net worth at $1 billion... they seem to have fallen fast.
 
Section 101

Section 101

All-Star
#28
#28
BMiller52 said:
No because they took out a line of credit with the NBA(I'm assuming the same one) back when it first became available a year or 2 ago.
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Oh, they havent spent it on maintaining the arena. they didnt spend it on players (they lowered the payroll). They didnt spend it on the coaches, lowest paid in the league. Petrie took a pay cut. So where did the $75 million go? My money is on the Palms. I really hope the league looks into this.
 
RookieOfTheDay

RookieOfTheDay

Starter
#29
#29
If the NBA lets these deadbeats walk out on Sacramento (which is trying to build them an arena!), and go against the wishes of the other Kings owners just so they can drag their sorry carcasses to another city where they can incur yet even more debt, then it's truly a pathetic and corrupt organization.

Why should the mayor, the fans, the Lakers and Clippers, and the minority Kings owners suffer just because these clowns are going broke and chasing a big fancy TV deal that they “think” is going to magically save their crumbling empire? It’s just not right, damn it!

They ought to at least be required to give Taylor/Icon a year to get an arena started.

If they’re really so broke that they need to move to saves their hides, then they have no business owning a team and should be required to sell!

The closer this date gets the madder it makes me. It just shouldn’t be allowed to go down like this and it’s so lame that there isn’t sh!t anyone can do about it.

Maloof apologists and Sacramento haters, don’t bother replying to me. I’ve heard what you have to say a million times... This has been going on for ten years, blah blah blah, Sacramento is lame, blah blah blah, it’s a business, blah blah blah etc. etc. etc.

Don’t care. None of that exonerates the Maloofs from being shady d-bags in my book.
 
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