OC Article - Personal loan from Samueli

[Gary]

Spend whose money? If they had extra money to spend would they borrow over and above the current value of the team?

They're borrowing mooney to leave.. They are willing to go into debt for a half billion more JUST to leave Sac? Makes no sense!!! Why take on such a huge debt if they weren't being bailed out in the immediate future?

This whole deal smells of last nights dead fish.

 

[Gary]

$300-350 million? Isn't that more than the team is worth? I understand they don't want to sell because of their father and the Rockets, but at some point, you're just digging yourself a major hole. It's not good for the NBA to let owners drag franchises down or tear them away from loyal fans because the owners have leveraged themselves through the roof. At some point, the league needs to step in. Enter Burkle.

Which I hope was brought up at the meetings... You said it perfectly.

 

[The Hammer]

I say open the books to Maloof's money trail, since it all sounds to suspicious..and isnt there a relocation fee that the clips and laker owners can jack up??

75 (sacramento)
77 (samueli)
75 (Relocation (can vary))
25 (honda center upgrade)
75 (League)

so thats around 325 mil at least... That is a ton of money to pay in the future.. can't run a good business by paying debts with another debt,

Ok. Come on man. Yes. the Maloofs have debt, but some of that is collateralized.

The 75/77 to sac has the arena attached. There has even been talk of a possible stipulation in the loan that it would be devalued if the property was devalued. Essentially making it a wash. At worst, it's worth around 30 mil.

The 25 mil for arena upgrades are part of the 75mil Samueli loan. So strike that.

The 75 mil from the league is a line of credit, how much of which has been used we don't know.

Relocation fee could be anywhere from 30 mil to 100 mil. but part of that would be taken care of by the Samueli loan. Say 40 of it. So say 20 mil out of pocket for relocation.

And the Maloofs Palms debt has been bought, people. They absolved themselves of that debt no doubt when they went down to the 12 percent ownership stake. They may have some payments on that. But so do all businesses.

I'm not a Maloof apologist, but I do prefer reality. All that said, I think these guys are probably leveraged to the hilt. Consider they have only about 150 mil of equity in the Kings. But, they also have some fast growing interests that are all about the youth southern california sports scene... skateboarding, etc. It's honestly just really hard to tell what their finances look like... but things do appear fishy.

 

[Livinthedream]

Ok. Come on man. Yes. the Maloofs have debt, but some of that is collateralized.

The 75/77 to sac has the arena attached. There has even been talk of a possible stipulation in the loan that it would be devalued if the property was devalued. Essentially making it a wash. At worst, it's worth around 30 mil.

The 25 mil for arena upgrades are part of the 75mil Samueli loan. So strike that.

The 75 mil from the league is a line of credit, how much of which has been used we don't know.

Not sure how you devalue a bond. The bond owners have to be paid back, plus interest. So that is valid debt. But this whole thread started from an article stating that there is an additional undisclosed loan amount from Samueli to the Maloofs. So yes, we have to speculate on that amount. And the speculation is that it will be used to either cover the relocation costs or to pay off the city of Sacramento and that's where the additional $77 mil from Samueli came in. You can call that a wash with the city loan.

But as far as the NBA line of credit, based on news reports, the amount on that line is not currently $0. And if there were a significant amount left on that line, then why all the personal loans and bond requests from the city of Anaheim? We are still looking at over $200 mil in debt after the move. More than their ownership stake in the Kings. $150 mil of it would be owed to Samueli.

 

[The Hammer]

Not sure how you devalue a bond. The bond owners have to be paid back, plus interest. So that is valid debt. But this whole thread started from an article stating that there is an additional undisclosed loan amount from Samueli to the Maloofs. So yes, we have to speculate on that amount. And the speculation is that it will be used to either cover the relocation costs or to pay off the city of Sacramento and that's where the additional $77 mil from Samueli came in. You can call that a wash with the city loan.

But as far as the NBA line of credit, based on news reports, the amount on that line is not currently $0. And if there were a significant amount left on that line, then why all the personal loans and bond requests from the city of Anaheim? We are still looking at over $200 mil in debt after the move. More than their ownership stake in the Kings. $150 mil of it would be owed to Samueli.

No, no. devalue the city loan from sac for the arena, based on current market value. I remember hearing something about that possibility, essentially saying the principal would be reduced to market value, basically preventing it from being upside down, which is currently now is. Not sure if it's true, but just remember hearing or reading something like that.

As for the rest, agreed, for the most part. We don't know all the numbers. But it is looking verrry fishy.

I add it up like this:

75 to Anehiem/Samueli (covers 25 mil of remodel, 50 mil towards moving costs /relocation fees)

77 to sac (minus the value of the arena if they sell it at market value at 30 mil). say 47.

Undisclosed personal loan from Sam (perhaps just enough to cover any potential difference in relo fee not covered by anaheim bonds.)

Undisclosed amount taken out from NBA. But let's guess at least 25 mil.

47+75+25= ~150 mil... but poss. more.

Not really sure where people are getting 500 mil. debt after the move.

But yeah, they appear to be owing more than their equity the team is worth, or right at about that amount.

One reason for perhaps not using that full line of credit with the league is they might have to show where it's going... prob not so with cash from Sam.

 

[JB_kings]

When the Maloofs borrow money for the Kings such as the NBA loan, the loan is made to the Kings, not to the Maloofs directly. The entire Kings organization is on the hook, not just the Maloofs. They are the ones calling the shots, but they don't pay the loans by themselves. The Kings' revenue is used to make the payments.

Limited partners get no say so in the decisons made. So when the team borrows money from Samueli, what did they use for security? They can't put up the limited partners share of the team. Maybe they used stock, real estate or whatever. Or maybe they had to agree to something very harsh like the miss a payment and the whole balance is due wording we saw in the Anaheim lease? I don't think this can look like any more of a gamble than if they got money from a loan shark.

Of course this looks great for those Socal Royals fans. They don't care if the Maloofs or Samueli owns the team. As long as they don't have to drive the extra miles to watch the Lakers, it's all good to them.

 

[Livinthedream]

77 to sac (minus the value of the arena if they sell it at market value at 30 mil). say 47.

One reason for perhaps not using that full line of credit with the league is they might have to show where it's going... prob not so with cash from Sam.

The only way the Maloofs can write off that $30 million is if they walk away from the loan and just give the city the Arena. Which nobody in Sac wants to happen and is a bad PR move for them and the league.

The league would frown upon owners borrowing against their team and not letting the league know about it. Would not be in the Maloofs best interest to do this.

We agree that this all looks bad from the Maloofs. The difference is that I'm looking at it from the worst case scenario as far as the money they are borrowing and you're taking the best cast scenario. I would normally admire and go along with your approach, but this is the Maloofs we're talking about. They haven't proven to be good business men in my opinion.

 

[Section 101]

No, no. devalue the city loan from sac for the arena, based on current market value. I remember hearing something about that possibility, essentially saying the principal would be reduced to market value, basically preventing it from being upside down, which is currently now is. Not sure if it's true, but just remember hearing or reading something like that.

As for the rest, agreed, for the most part. We don't know all the numbers. But it is looking verrry fishy.

I add it up like this:

75 to Anehiem/Samueli (covers 25 mil of remodel, 50 mil towards moving costs /relocation fees)

77 to sac (minus the value of the arena if they sell it at market value at 30 mil). say 47.

Undisclosed personal loan from Sam (perhaps just enough to cover any potential difference in relo fee not covered by anaheim bonds.)

Undisclosed amount taken out from NBA. But let's guess at least 25 mil.

47+75+25= ~150 mil... but poss. more.

Not really sure where people are getting 500 mil. debt after the move.

But yeah, they appear to be owing more than their equity the team is worth, or right at about that amount.

One reason for perhaps not using that full line of credit with the league is they might have to show where it's going... prob not so with cash from Sam.

A few things.

One they have to sell the arena property first. That could take years. If it's valued at $30 million they still have to pay commisions and transactions costs. In the meantime they still have to pay taxes and insurance. So the chances are if they wanted to get rid of it right now they would be lucky to get $20 million.

The reported numbers are they borrowed $75 million from the league. I don't know why people getting this confused. The max credit line amount was $125 million per team.

So right now its $67 million to city. $75 million to the league for $142 total.

After relocation you add $10 million for prepayment on the bonds, $25 million for the honda center remodel and the relocation fee from the league. So now its at $177 million + the relocation fee. They are already at their ownership share before the relocation costs are added.

 

[The Hammer]

A few things.

One they have to sell the arena property first. That could take years. If it's valued at $30 million they still have to pay commisions and transactions costs. In the meantime they still have to pay taxes and insurance. So the chances are if they wanted to get rid of it right now they would be lucky to get $20 million.

The reported numbers are they borrowed $75 million from the league. I don't know why people getting this confused. The max credit line amount was $125 million per team.

So right now its $67 million to city. $75 million to the league for $142 total.

After relocation you add $10 million for prepayment on the bonds, $25 million for the honda center remodel and the relocation fee from the league. So now its at $177 million + the relocation fee. They are already at their ownership share before the relocation costs are added.

Ok. Well that clarifies things.

I think this is probably the best assessment of the their team related finances. Say relo is 50mil, and I think that would be lucky for them.. given what they Lakers and clippers will demand. so say they'll owe 225 plus orange wedges and gatorade for the moving crew. I'm just dying to know why it makes it worth it for them at this point.... so they can borrow more agianst the increased value of the team when they move to the bigger market????

 

[Sptsjunkie]

Just remember, the Maloofs only own 51% of the team. The limited partners own the other 49%. So picking a nice round number, if the team is worth 300 million, the Maloofs share is only worth about 153 million. That is the most they can put up as collateral in a loan agreement. Samueli looks like he's put up enough in loans to eat up a good chunk of that. What are the assets to secure these loans in case of default? We know the Palms isn't one of those and a bunch of skateboard parks is not likely. If they have real estate, that isn't the strongest right now. And if Samueli is #1 on the payback list, does this make the NBA #2 for their outstanding loans? See where this is going? Yeah rich people borrow money all the time. But when you borrow more than the value of your security, you start getting nervous if you are one of those creditors. Maybe the NBA is just now really paying attention to all this and some fact finding was in order. Of course Samueli owning the team and securing the NBA's interest is his way of getting the team by default. But Samueli gets to hold all the cards and not David Stern.

As other have pointed out Stern and the BOG would never allow this, unless they had also vetted Samueli and approved of him as a potential owner. They have an approval process for new owners and aren't going to just let someone sneak into that group. If they do have collateral it must be real estate, Palms, etc. I don't think the NBA would let that be part of the deal.

 

[Aenadin]

Ok. Well that clarifies things.

I think this is probably the best assessment of the their team related finances. Say relo is 50mil, and I think that would be lucky for them.. given what they Lakers and clippers will demand. so say they'll owe 225 plus orange wedges and gatorade for the moving crew. I'm just dying to know why it makes it worth it for them at this point.... so they can borrow more agianst the increased value of the team when they move to the bigger market????

probably the arena? and the chance to be in a big market? it really isnt worth it the gambler in them is talking... judging from the readings that they had months to hammer down the details on this move and it is still questionable tells me that there are under the table dealings that make this really suspicious. in the end the LEAGUE will decide what is BEST for the LEAGUE not the maloofs. that should be the case. Really, Buss losing 500 mil in TV deals if they move (reportedly) thats a large sting to the pocket imo. just a risky move they burned the bridges with SAc community too early... perhaps they shouldnt even have burned the bridges...

 

[Aenadin]

As other have pointed out Stern and the BOG would never allow this, unless they had also vetted Samueli and approved of him as a potential owner. They have an approval process for new owners and aren't going to just let someone sneak into that group. If they do have collateral it must be real estate, Palms, etc. I don't think the NBA would let that be part of the deal.

but the maloofs own only 18% of the palms, thats really a small fraction, also what else can they get as collateral the Maloof money cup? I don't think they have any chips left to bargain with other than the kings.

 

[The Hammer]

As other have pointed out Stern and the BOG would never allow this, unless they had also vetted Samueli and approved of him as a potential owner. They have an approval process for new owners and aren't going to just let someone sneak into that group. If they do have collateral it must be real estate, Palms, etc. I don't think the NBA would let that be part of the deal.

but the maloofs own only 18% of the palms, thats really a small fraction, also what else can they get as collateral the Maloof money cup? I don't think they have any chips left to bargain with other than the kings.

Plus, I would not be surprised if their stake in the Palms is ALREADY collateralized against the huge loans they've got out on the place. I'm guessing they were able to restructure/sell off most of the debt they took out on that place to/with TPG (firm that scoops up failing casinos), but must've kept their remaining share collateralized. I mean of course.

Can't collateralize something twice.

Wells Fargo Stock comes to mind as a possibility.

 

[Aenadin]

The whole maloof money issue is just too complicated for a 2 day meeting, the league and the committee better investigate on this on too.. really its just that easy to get out of debt by selling the team, all thats hindering them is their backdoor deal with anaheim and their we still want to be in the league crap, the moment they sold their beer company and dismantled the monarchs it was a sign that they were really suffering financially, the league should realize the maloof's capability of running the kings or any franchise is limited already, of course KJ won't say that its up to the committee and the owners to realize that.

are there any sources to where they used the loan the league gave them? everything and I mean EVERYTHING must be itemized. and not a cent goes to non nba stuff.

the league isnt responsible nor is it obligated to bail out the maloofs with their debts.. the move to anaheim isn't in favor of the league rather its for the maloofs. they blew it they really blew it in SAC. It's up to KJ and the ICON group to drive that final stake at this relocation's heart.... and force the hand of stern

 

[The Hammer]

are there any sources to where they used the loan the league gave them? everything and I mean EVERYTHING must be itemized. and not a cent goes to non nba stuff.

And that right there could be what has them panicking.

I'm SURE there's going to be a thorough investigation, at least kept private at first, but the way they've been acting... it really seems like things are about to completely blow up in their world. I could be wrong, but that's my hunch. Poor guys. I actually do wish them the best, unlike some around here.

We could be in for a bigger scandal than we thought.

I bet KJ knows the answers to these things. Burkle too.

 

[Section 101]

Ok. Well that clarifies things.

I think this is probably the best assessment of the their team related finances. Say relo is 50mil, and I think that would be lucky for them.. given what they Lakers and clippers will demand. so say they'll owe 225 plus orange wedges and gatorade for the moving crew. I'm just dying to know why it makes it worth it for them at this point.... so they can borrow more agianst the increased value of the team when they move to the bigger market????

So in todays bee, Breton says the amount owed to the NBA is anywhere between $75 mil and $100 mil and could be more.

The Kings also are believed to owe anywhere from $75 million to $100 million or more to the NBA. Bloomberg reported they are in such debt to creditors in Las Vegas, they could lose controlling interest of The Palms casino.

Read more: http://www.sacbee.com/2011/04/17/3558344/marcos-breton-nba-needs-a-timeout.html#ixzz1JlU9Cc00

 

[Aenadin]

And that right there could be what has them panicking.

I'm SURE there's going to be a thorough investigation, at least kept private at first, but the way they've been acting... it really seems like things are about to completely blow up in their world. I could be wrong, but that's my hunch. Poor guys. I actually do wish them the best, unlike some around here.

We could be in for a bigger scandal than we thought.

I bet KJ knows the answers to these things. Burkle too.

KJ and Burkle know... whats strange is I haven't heard from C-Webb yet what is he up to?? and Buss and the other owners saying they will block this move.

questionable dealings really, and doesnt make sense.... I can't feel sorry for them because its a damn business and they blew it... they just seem to0 impulsive for me and too emotional, for guys coming from Sin City you'd expect them to keep the cards close to the chest and poker faced. seeing them flustered and frustrated after the meeting, there's blood in the water and KJ smells it

I have a feeling KJ still has something up his sleeve.

 

[The Hammer]

KJ and Burkle know... whats strange is I haven't heard from C-Webb yet what is he up to?? and Buss and the other owners saying they will block this move.

questionable dealings really, and doesnt make sense.... I can't feel sorry for them because its a damn business and they blew it... they just seem to0 impulsive for me and too emotional, for guys coming from Sin City you'd expect them to keep the cards close to the chest and poker faced. seeing them flustered and frustrated after the meeting, there's blood in the water and KJ smells it

I have a feeling KJ still has something up his sleeve.

About KJ, me too, and it's in addition to the ice water already running in his veins that are in his arm up his sleeve.

They were so flustered coming out of the hotel, they literally weren't sure where the car was. Strange public showing really. And they had to bring in George who is the smooth one.

As an interesting entity... I wonder what role TPG plays in all this. No doubt some major books had to be opened up before TPG was going to get involved with the Palms and possibly help restructure some debt. And you know if any cash was coming into the Palms trying to save it as it was going down... TPG's gonna ask where the hell it came from... you just don't do a deal like that unless you know ALL the details. Sworn to secrecy by legal documents perhaps. But one would think there's some info there. It's not like they'd be funneling money from the kings/nba to their skate parks... when the Palms was sinking.

 

[ParniValjak]

And that right there could be what has them panicking.

I'm SURE there's going to be a thorough investigation, at least kept private at first, but the way they've been acting... it really seems like things are about to completely blow up in their world. I could be wrong, but that's my hunch. Poor guys. I actually do wish them the best, unlike some around here.

We could be in for a bigger scandal than we thought.

I bet KJ knows the answers to these things. Burkle too.

I do wish them all the best but I also would love to see them sell the team to Burkle either on their own accord or by being painted into a corner where they don't have any other option.

This community deserves owners who will appreciate them and who can afford to run a small market team and make them into a team that is feared in the NBA. I think Burkle can do that. He is a guy who operates from background and doesn't like to get his name or photo in a paper. That sort of approach would really work in Sacramento. He would be able to "blend in" so to speak.

Maloofs have been a breath of fresh air for this franchise but all the moves that they have made in the last 5-7 years had stunk and we are still paying for it. The fans, and Sacramento DESERVE an owner or owners that will given them what they want the most and thats a team to represent their home city with pride. Not that these guys don't have pride but a new owner who is not in dire financial situation would be able to spend money to make this team matter again.

 

[The Hammer]

So in todays bee, Breton says the amount owed to the NBA is anywhere between $75 mil and $100 mil and could be more.

Read more: http://www.sacbee.com/2011/04/17/3558344/marcos-breton-nba-needs-a-timeout.html#ixzz1JlU9Cc00

Ok. So going conservative that puts it at the 177 you estimated before relo fee. say it's 40 to be conservative.

Now we're at roughly 220. If the value of the team jumps to 400, their still overextended.

I still don't think this explains everything. I actually have a hard time seeing this move getting approved, and that's just going on the facts in front of my face... not with what my hunches are telling me.

 

[jpsls]

Ok. So going conservative that puts it at the 177 you estimated before relo fee. say it's 40 to be conservative.

Now we're at roughly 220. If the value of the team jumps to 400, their still overextended.

I still don't think this explains everything. I actually have a hard time seeing this move getting approved, and that's just going on the facts in front of my face... not with what my hunches are telling me.

Also their potential lease with Anaheim is not that great. With the new CBA, they probably lose some money due to revenue sharing. Each day, new facts about this potential relocation become disclosed leaving me wondering if the Maloofs really did their homework.

Honestly, there has got to be some under the table deal with Samuel. What they can potentially get in Anaheim may not even be better than what they have in Sacramento.

 

[Aenadin]

A lot of great things can be done if the city is behind a team, Burkle has done this before, he has good track record in terms of building an arena and saving a financially ailing team.. when all is said and done let's see if they will still sing to the tune of we won't sell the team and burkle can go to back to where he came from... and I heard the ICON group can accelerate certain parts of the arena study to be presented on may 2. if it sounds really solid its going to be looking good for sacramento... i need more articles to read about this damn, im on summer vacation and the this got me reading into things haha

 

[Aenadin]

So over all, it is NOT looking good for the maloofs? so they can't sell the team to samueli right? not with out kj and the league approving

 

[The Hammer]

So over all, it is NOT looking good for the maloofs? so they can't sell the team to samueli right? not with out kj and the
league approving

KJ won't have to approve any sale. But hell no Samueli can't just become an owner through some kind of default on a loan he makes to the Maloofs. Not even close. There's no way he's planning for that. He knows better. I think he's hoping though if he gets the team down there, he'll all the sudden be the preferred "local" owner to buy the team should the Maloofs begin to lose it. The league very closely scrutinizes who becomes an owner. It's really like a very exclusive social club. And rightly so, as the actions of each owner effect the overall impact of the brand and product.

 

[Aenadin]

The community's effort and the local officials are doing a great job right now, as much as possible its best if the media uncovers more about these things, and really bring the maloofs under the microscope, and by the way things are going it is not so comfortable for them right now.... they lose either way whatever the league decides, they lose if they are forced to sell, and they lose a ton of money if they move... so might as well lose with some money and sell to sacramento.

 

[Gary]

Also their potential lease with Anaheim is not that great. With the new CBA, they probably lose some money due to revenue sharing. Each day, new facts about this potential relocation become disclosed leaving me wondering if the Maloofs really did their homework.

Honestly, there has got to be some under the table deal with Samuel. What they can potentially get in Anaheim may not even be better than what they have in Sacramento.

That's the ONLY was I see this move approved is if Samueli is welcomed into the NBA owners group and if the Maloofs fail the team goes to him. that's the ONLY way I see it happening.

 

[The Hammer]

The community's effort and the local officials are doing a great job right now, as much as possible its best if the media uncovers more about these things, and really bring the maloofs under the microscope, and by the way things are going it is not so comfortable for them right now.... they lose either way whatever the league decides, they lose if they are forced to sell, and they lose a ton of money if they move... so might as well lose with some money and sell to sacramento.

And you can be damn sure, after the example of the article in the LA times, that Buss has got some media power that'll go nuts over any negative details... just look what they did with one little quote ("the kids have no money") Which was actually probably a quote from Buss himself.... "a person with knowledge of the relocation committee..." i.e. Jerry Buss, Clay Bennett's best buddy among the owners. Contrary to the surface look, Bennett being the head is HUGE for us... he'll deliver inside dirt to Buss who will get it to the LA Times....

 

[The Hammer]

That's the ONLY was I see this move approved is if Samueli is welcomed into the NBA owners group and if the Maloofs fail the team goes to him. that's the ONLY way I see it happening.

You'd gotta think they'd prefer Burkle be in their club... and that there be a successful franchise in Sac owned by him.

 

[Aenadin]

IF I were buss I'd block and barricade the movers from sacramento going to anaheim, no way in hell am I losing 500 million dollars worth in TV contract if they move in. Just no WAY. he is a smart businessman... if The kings can flourish in Sacramento become really competitive under burkle it might bring back excitement in the west. 3 teams in so. cal and mickey mouse land just won't work...

 

[Gary]

You'd gotta think they'd prefer Burkle be in their club... and that there be a successful franchise in Sac owned by him.

That's why I think they extended it again. I believe that the Maloofs are over their head in debt and got a bailout, so to speak, from Samueli. The reason it can't work for the Maloofs in Sac is because they need this bailout money NOW, and what are they to do in Sac? Ask Sac for more money (on top of the 77mil they owe)? They cannot sit idle while their businesses go down the drain so if they get money now they can pay their creditors. That's why they weren't listening to any plans regarding an arena.

I think Samueli gave them a sweet deal with cash up front to use for whatever they needed then the rest goes on their tab to be paid later. That's why they are fighting the whole Arco Arena loan as well. They just DON'T have the cash to pay it off. This whole deal smells, and it's at the expense of the fans who are LOYAL AS HELL to the Kings. The Maloofs shortcomings shouldn't be at the expense of the fans.

Sell the damn team if you cannot make it work here. Let them keep a % of the ownership of the Kings to show once the team is making money that yes, it would have worked had they stayed here. Just don't give them majority ownership ever again.