SLAM Online does the Maths; Relocation costs

[Sac.1989]

http://www.slamonline.com/online/nba/2011/05/kings-relocation-the-cost-of-freedom/2/

Kings Relocation: The Cost of Freedom

Is the grass really greener for Joe and Gavin in Anaheim?

How much money really do the Maloofs stand to gain by moving to Anaheim?
With a little math using the known-financial data available to us from various sources, we can come up with a rough estimate.
<H3>The Spoils of Anaheim</H3>Revenue Estimate
Revenue Stream
Source
$30 million
Corporate Commitments
Orange County Register
$13 million
Premium Sales
Orange County Register
$24 million
Television Contract
Orange County Register
$75 million
Samueli Personal Loan
Orange County Register
$25 million
Franchise Value Boost from LA Market
Forbes


Not included is the $70 million in upgrades to the Honda Center covered by its chief operator, Henry Samueli. That financial figure, reported by the OC Register, doesn’t go to the Maloofs. Rather it goes in the pockets of construction companies who will improve the arena’s existing infrastructure with a new practice facility and NBA-ready locker rooms.


<H3>What Exists in Sacramento</H3>Revenue Estimate
Revenue Stream
Source
$10 million
Untapped Corporate Commitments
Mayor Kevin Johnson
$20 million
Existing Corporate Partnerships
Anonymous Maloof Sports & Entertainment Source
$11 million
Television Contract
Sports Illustrated


This list does not include the estimated profits generated by Power Balance Pavilion’s premium sales (courtside seats, luxury suites and balcony boxes). SLAM was unable to attain that information.
It’s important to note that the $10 million in corporate commitments secured by KJ would be added on top of the existing $20 million in corporate partnerships. The sum of those parts paints an overall picture of the Kings’ business base in Sacramento.


<H3>The Costs of a Move</H3>Loss Estimate
Debt Source
Source
$150 million
Relocation Fee
KHTK Radio
$75 million
NBA Credit
KFBK Radio
$77 million
City of Sacramento
City of Sacramento


The grand total of these three debts combined?
A whopping $302 million.
To keep things in perspective, the Kings are currently valued at $300 million according to a recent estimate by Forbes.

<H3>Net Value of Move (Black signifies gain, Red signifies loss)</H3>$30 million
Anaheim Corporate Commitments
$13 million
Anaheim Premium Sales
$10 million
Untapped Sacramento Corporate Commitments
$20 million
Existing Sacramento Corporate Commitments
$24 million
Anaheim TV Contract
$11 million
Sacramento TV Contract
$25 million
Franchise Value Boost from LA Market
$75 million
Samueli Loan
$75 million
NBA Credit
$150 million
Relocation Fee
$77 million
Sacramento Loan
$175 million
Grand Total


Based on the final estimate, it appears a move to Anaheim isn’t as lucrative as it would otherwise seem for the Maloofs – at least not in the short-term. You’ll notice that Samueli’s loan essentially has zero net value for the Kings co-owners, as it is cancelled out by outstanding loans to both the NBA and the city of Sacramento and also relocation costs.

Long-term, Orange County could prove to sustain another NBA franchise. It’s located in the second-largest TV market in the country compared to Sacramento, which ranks 20th. It has a corporate base to pool from that’s nearly three times bigger than California’s capital according to a report from ESPN. But with the debt the Maloofs are accumulating by simply moving the team, would the Kings co-owners even be in the picture?

There seems to be 175 million reasons to think not.

 

[Sac.1989]

format didnt come out as hoped, the link has it in nice tables if this is too hard to decipher

 

[rainmaker]

So the Maloofs also owe KHTK $75M which has to be paid?

 

[ParniValjak]

So the Maloofs also owe KHTK $75M which has to be paid?

Nah, that the source of the $75million figure.

So it goes in this format,
Figure
What the figure is for
Source where they got that figure from

Eg:

Figure: $150million
What the figure is for: Relocation Fee
Source where they got that figure from: KHTK

 

[rainmaker]

Nah, that the source of the $75million figure.

So it goes in this format,
Figure
What the figure is for
Source where they got that figure from

Eg:

Figure: $150million
What the figure is for: Relocation Fee
Source where they got that figure from: KHTK

That would make sense.

 

[funkykingston]

One thing to note about the math is that the loan from Samueli is being shown as a gain. Sure, it's an instant influx of cash, but it's also additional debt that must be repaid.

 

[kennadog]

One thing to note about the math is that the loan from Samueli is being shown as a gain. Sure, it's an instant influx of cash, but it's also additional debt that must be repaid.

Or a down payment on team ownership by Samueli.

 

[Section 101]

One thing to note about the math is that the loan from Samueli is being shown as a gain. Sure, it's an instant influx of cash, but it's also additional debt that must be repaid.

And if revenue sharing happens they go from receiving to paying.