Shirey in the Bee: Viewpoints: Kings gave bad data on arena

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Understandably, emotions are running high on all sides. But let's set aside the emotions and the heated rhetoric for a moment and simply review the facts. As the saying goes, we're all entitled to our opinions. But we are not entitled to make up our own facts.


Much of the information in question in the past week has come from economic consultant Christopher Thornberg, who was recently hired by the owners of the Kings and who wrote the Viewpoints article "Decision to kill the plan will benefit city in the long run" published Tuesday in The Bee. Unfortunately, at no time during his few weeks' assignment did Thornberg contact me, other city staff, the mayor or any of the highly experienced and informed sports consultants or economists employed by the city.
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http://www.sacbee.com/2012/04/22/4430793/kings-gave-bad-data-on-arena.html
 
Shirey nails it.

Agian, great timing on this article (consulted by Lehane I'm sure).

You let Thonrberg and other Maloofites have their moment, and then you systematically destroy what they say, point by point, and in a Sunday issue no less. This stuff also fits the formula for good dramatic writing, even though the material is non-fiction! By the time you're halfway through the article, you can't wait to get to the next paragraph to see what other massive lies were spewed, and he effectively uses an understated tone, while setting the details of the story out there in stark contrast. This is the information that will stick in people's minds, not Thornberg's. Thornberg will likely not get another chance to make a media impression or to write another article in the Bee. His image is now crystalized. Lehane is insane!
 
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Maybe a legal expect can answer this, but what exactly qualifies as negotiating in bad faith? How does intentionally throwing out misleading data/numbers not fall under negotiating in bad faith?

Just curious as to what exactly it would take to present a case the Maloofs in fact are not negotiating in good faith.
 
rainmaker said:
Maybe a legal expect can answer this, but what exactly qualifies as negotiating in bad faith? How does intentionally throwing out misleading data/numbers not fall under negotiating in bad faith?

Just curious as to what exactly it would take to present a case the Maloofs in fact are not negotiating in good faith.
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Best I could come up with (not a lawyer):

http://en.wikipedia.org/wiki/Bad_faith#In_law

What was called "Canada's best judicial definition of 'bad faith'" by Duhaime's Legal Dictionary is similarly more consistent with use in other fields discussed above.

Good faith and its opposite, bad faith, imports a subjective state of mind, the former motivated by honesty of purpose and the latter by ill-will.
Duhaime also refers to another description, "...bad faith refers to a subjective state of mind… motivated by ill will ... or even sinister purposes."
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Ahh, great article. Seems the City has nearly all arguments in their favor and the Maloofs nearly none now. Quite a sham from the consultant. Would love to see consultant/Maloofs counter to this info in support of their side. Damage now seems to be nearing unrepairable. Also I look at the Maloof stuff as delaying tactics to push arena development past a possible October 2015 completion/opening as some sort of support for their arguments. But so much damage is now done that they may have dug themselves such a large hole as not to be able to climb out. Compounded by the debt needed by the Maloofs to fund the arena is worth more than their current 52% share of the Kings based on recent valuations.

Curious is the silence of the 48% minority Kings owners. Who exactly are they and why have they not been heard from individually or collectively?
 
CruzDude said:
Ahh, great article. Seems the City has nearly all arguments in their favor and the Maloofs nearly none now. Quite a sham from the consultant. Would love to see consultant/Maloofs counter to this info in support of their side. Damage now seems to be nearing unrepairable. Also I look at the Maloof stuff as delaying tactics to push arena development past a possible October 2015 completion/opening as some sort of support for their arguments. But so much damage is now done that they may have dug themselves such a large hole as not to be able to climb out. Compounded by the debt needed by the Maloofs to fund the arena is worth more than their current 52% share of the Kings based on recent valuations.

Curious is the silence of the 48% minority Kings owners. Who exactly are they and why have they not been heard from individually or collectively?
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Only one has spoken up in the past and I don't remember his name. It may very well be that the contract that binds these folks together has a clause that the minority owners can say nothing. If that is not true, you have posed a very good question. The Maloofs are playing with their money also. When we say that the Maloofs have been loaned money, we really mean the partnership has been loaned money and not just the family.
 
Unless there's some provision saying they can't, I would love to see the minority owners release a public statement indicating that they have no confidence in the majority owners. This is their investment too-- so if the Maloofs run the team into the ground and the team value is affected negatively because of it, the minority owners are losing money on their investment. And if it could ever be proven that the Maloofs have been sabatoging negotiations and are at least partially responsible for the current value of the team, then they should also be allowed to sue the majority owners. Does anyone know where info can be found on what rights the minority owners have? There's got to be a public contract somewhere that spells it out.
 
Dreamtiger said:
Unless there's some provision saying they can't, I would love to see the minority owners release a public statement indicating that they have no confidence in the majority owners. This is their investment too-- so if the Maloofs run the team into the ground and the team value is affected negatively because of it, the minority owners are losing money on their investment. And if it could ever be proven that the Maloofs have been sabatoging negotiations and are at least partially responsible for the current value of the team, then they should also be allowed to sue the majority owners. Does anyone know where info can be found on what rights the minority owners have? There's got to be a public contract somewhere that spells it out.
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The rights of the minority owners would only be found in the partnership papers. And I'm not sure that contract is public.

Regardless, at this point there is nothing to be gained by the minority owners giving a public statement of no confidence. They don't have the votes to overthrow them and it could, in fact, make things worse.

I'm almost positive there are things going on in the background that we may or may not eventually learn about. I can guarantee the minority owners aren't happy with how things have been handled by the Maloofs recently.
 
Kinda makes one wonder if the city would exchange Maloof debt for % ownership. Hmmm, that works out to be about $65M of $325M evaluation or 20%. Then exchange that debt for slightly more bucks from a private party who would throw his ownership % with the minority to make them a majority and force the whole issue. Geeze. I thought of that without even a glass of wine!!! Oh well. One can dream.
 
There have been comments in the Bee from one or two minority owners. They weren't happy about the team being moved, but they have no say. The Maloofs own a controlling interest. Something like 52-53%. Basically, it's majority ownership rules. All the other owners could be totally against a Maloof decision, but they can't get to a 51% majority, even all together. Basically, the Maloofs' decisions are it, even if the minority owners all hate them.
 
Glenn said:
Only one has spoken up in the past and I don't remember his name. It may very well be that the contract that binds these folks together has a clause that the minority owners can say nothing. If that is not true, you have posed a very good question. The Maloofs are playing with their money also. When we say that the Maloofs have been loaned money, we really mean the partnership has been loaned money and not just the family.
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Jay-Z is always blabbing his mouth about the Nets and he's only a minority owner.
 
CruzDude said:
Kinda makes one wonder if the city would exchange Maloof debt for % ownership. Hmmm, that works out to be about $65M of $325M evaluation or 20%. Then exchange that debt for slightly more bucks from a private party who would throw his ownership % with the minority to make them a majority and force the whole issue. Geeze. I thought of that without even a glass of wine!!! Oh well. One can dream.
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I've thought of the same thing.
 
CruzDude said:
Kinda makes one wonder if the city would exchange Maloof debt for % ownership. Hmmm, that works out to be about $65M of $325M evaluation or 20%. Then exchange that debt for slightly more bucks from a private party who would throw his ownership % with the minority to make them a majority and force the whole issue. Geeze. I thought of that without even a glass of wine!!! Oh well. One can dream.
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I don't think it works that way. From reading some of the stuff out there, it seems that the "managing partnership" doesn't go along with the majority of the shares, but is a separate designation, and that if the Maloofs sold down below the 50% threshold, they'd still be managing partners. I'm not sure on that, but that's the gist I get.
 
Capt. Factorial said:
I don't think it works that way. From reading some of the stuff out there, it seems that the "managing partnership" doesn't go along with the majority of the shares, but is a separate designation, and that if the Maloofs sold down below the 50% threshold, they'd still be managing partners. I'm not sure on that, but that's the gist I get.
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I've also seen it written where the Maloofs did sell off 10% to Hernreich about 10 years ago and they own about 43%. So Hernreich could be a majority investor. Although he is a life long Maloof associate.
 
Capt. Factorial said:
I don't think it works that way. From reading some of the stuff out there, it seems that the "managing partnership" doesn't go along with the majority of the shares, but is a separate designation, and that if the Maloofs sold down below the 50% threshold, they'd still be managing partners. I'm not sure on that, but that's the gist I get.
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http://hoopedia.nba.com/index.php?title=Sacramento_Kings_Ownership_History

That could be true but since they started out as limited minority partners and then purchased controlling interest? I'm not sure what purchasing controlling interest means or entails?
 
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