Stern pulls no punches in Bee article (merged)

As someone who has criticized the Bee a LOT over the years, I feel it only fair to commend them for an excellent article. They got quotes from Stern that only reinforced what a lot of us have been saying.
 
Krunker said:
In this article on the Bee, Stern really comes out and basically says the Maloofs are weasels.

http://www.sacbee.com/2012/04/28/4449510/city-may-get-new-arena-but-it.html

I like that he warns that it would be a mistake to rely on the new revenue sharing to make-do at Power Balance!
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Interesting, huh? I was assuming the Maloofs were going to depend on the revenue sharing to make a profit. Oops! I think Stern is very, very angry and although that may or may not help Sacramento, it sure isn't going to help the Maloofs.
 
A source familiar with the team's situation said the Kings are carrying about $205 million of debt, including a city loan of about $65 million. Forbes magazine has estimated the team to be worth $300 million.

Read more here: http://www.sacbee.com/2012/04/28/4449510/city-may-get-new-arena-but-it.html#storylink=cpy
Click to expand...
WOW!!!

That is MUCH worse than I thought! I was thinking about $170 million of debt but $205 million is fair bit more. No wonder the Magoofs could not do the arena deal. They are flat out broke! If they did the deal, the team would be completely levereged. There is a reason why they don't want to sell, its because they would get peanuts after they sell the team. The value of the team would be rock bottom with a debt like that.
 
And so begins the rain of pain from the Sterninator down onto the Maloofs.

As I said before, they've now poked the bear, especially when they trashed the deal in public, basically accusing the NBA/Stern of trying to force them to take a bad deal. They will be crushed.

One thing Stern NEVER does, is change is stance/mind/publicly expressed opinion on something. He's made it CRYSTAL clear where he stands on this. He'll get them, one way or another.

And also, yes, fabulous reporting. It has been top notch on this whole topic.
 
The Hammer said:
And so begins the rain of pain from the Sterninator down onto the Maloofs.

As I said before, they've now poked the bear, especially when they trashed the deal in public, basically accusing the NBA/Stern of trying to force them to take a bad deal. They will be crushed.

One thing Stern NEVER does, is change is stance/mind/publicly expressed opinion on something. He's made it CRYSTAL clear where he stands on this. He'll get them, one way or another.

And also, yes, fabulous reporting. It has been top notch on this whole topic.
Click to expand...

Let's hope that he gets them soon before they can **** up this team any more. I would love to see nothing more than Maloofs getting "force out" as owners and someone much more financially stable taking over and making the team into a contender by opening up the cheque books. First starting by showing Smart the door and getting a real coach.
 
Čarolija said:
WOW!!!

That is MUCH worse than I thought! I was thinking about $170 million of debt but $205 million is fair bit more. No wonder the Magoofs could not do the arena deal. They are flat out broke! If they did the deal, the team would be completely levereged. There is a reason why they don't want to sell, its because they would get peanuts after they sell the team. The value of the team would be rock bottom with a debt like that.
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More than peanuts. I've seen this misrepresented before, it's the TEAM that is carrying the debt, as the article stated, not just the Maloofs half.

There's still at least a hundred mil in equity in the team. Yeah, another 67 would be damn close to the hilt, but if they sell now, they do likely get above market value. I bet they could sell the team for at least 350M, wouldn't be surprised if it approached 400M, but of course that would be without assuming the debt. So, 205M in debt, sell for 380M, that's 180M profit, take 52% of that: 95M if they sold. But that is a crapload of debt to be carrying on an asset that big.
 
The Hammer said:
More than peanuts. I've seen this misrepresented before, it's the TEAM that is carrying the debt, as the article stated, not just the Maloofs half.

There's still at least a hundred mil in equity in the team. Yeah, another 67 would be damn close to the hilt, but if they sell now, they do likely get above market value. I bet they could sell the team for at least 350M, wouldn't be surprised if it approached 400M, but of course that would be without assuming the debt. So, 205M in debt, sell for 380M, that's 180M profit, take 52% of that: 95M if they sold. But that is a crapload of debt to be carrying on an asset that big.
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There's no way their ~52% of the team would fetch them 350 million on a good day.
 
Tetsujin said:
There's no way their ~52% of the team would fetch them 350 million on a good day.
Click to expand...

Ok, I guess I wrote that wrong, what I meant is that is what the whole team would fetch. Any way you break it down, the Maloofs have about 50m in equity if you go by current valuation, but on the actual market at this time, if they sold it, I think they'd net 90-100M.

Y'all following me on the math?

team debt: 205M
fetchable value 400M

Maloof share of debt: 110M
Maloof share if sold: 205M

New owner: pays 205M for 52% of team
New owner: assumes 52% of team debt (105M)
New owner: obtains 52% and controlling interest of team
New owner: stoked
New owner: buys KJ a crab dinner and signs whatever papers needed to break ground immediately

Team Value: goes up about another 40M right after that, and because of the new TV contract and sponsors freaking out happy to have a decent business person to work with and a new arena.
 
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The Hammer said:
Ok, I guess I wrote that wrong, what I meant is that is what the whole team would fetch. Any way you break it down, the Maloofs have about 50m in equity if you go by current valuation, but on the actual market at this time, if they sold it, I think they'd net 90-100M.

Y'all following me on the math?

team debt: 205M
fetchable value 400M

Maloof share of debt: 110M
Maloof share if sold: 205M

New owner: pays 205M for 52% of team
New owner: assumes 52% of team debt (105M)
New owner: obtains 52% and controlling interest of team
New owner: stoked
New owner: buys KJ a crab dinner and signs whatever papers needed to break ground immediately

Team Value: goes up about another 40M right after that, and because of the new TV contract and sponsors freaking out happy to have a decent business person to work with and a new arena.
Click to expand...

Oh I follow your maths but I don't think its realistic! There is no way the team is worth $380-$400 million! NO ONE would evaluate the team to be worth that much taking into account the debt and the arena and the revenue stream. Hornets just got bought for around $330 million and their situation is better than ours! Kings are worth around $300 million but someone might be willing to give $330 million
 
I just wish the league could somehow force the Maloofs to sell. At this point I wish the NBA would give us the Kings name and let the broke Maloofs go elsewhere as the royals. This city deserves better. We are ready to go. We have strike while iron is hot.
 
Those are some pretty extraordinary statements from Stern, IMO. I don't know if they'll mean anything in the long run but wow, he's called out the Maloofs very publicly here.
 
As much as I appreciate the comments from the Commissioner, I feel that this situation is far from over and the public fallout will get worst before it gets better. THE LEAGUE CAN NOT FORCE THIS OWNERSHIP OUT. If that was the case, Donald Sterling would have been gone years ago. This is how I see this situation playing out.

1. Ownership begins a PR campaign to bring the City to the table for public support to renovate Power Balance.

2. The City tells ownership to go to Hell (you all heard KJ almost cursed yesterday in his Presser:D, so "go to Hell" is not far fetched from the NBA All Star)

3. As the team suffers on the court, sponsorship suffers in the arena and attendance suffers in the stands.

4. Ownership of the Kings file for relocation in either 2014 or 2015, with the sob story that the City has turned the fans against the organization, that the poison in the city has hindered the ownership's ability to raise private capital to renovate and that they can no longer do business in the City of Sacramento.

5. The NBA does not approve relocation. Or with the slim chance that they do, the cost prohibits a new city to financially back the Kings moving. (i.e. relocation cost, incurred debt by the team, building a new facility and the City of Sac 67 million owed)

6. Then and only then the ownership will either sell the team or go into a prolonged anti trust lawsuit to force a relocation.

This is how I see this story playing out. In the mean time the Kings win the lottery get the 2012 #1 pick, but Anthony Davis representatives think it is in their client's best interest to publicly say he does not want to play in Sacramento because of the instability of the ownership.:(
 
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Siranthony said:
I just wish the league could somehow force the Maloofs to sell. At this point I wish the NBA would give us the Kings name and let the broke Maloofs go elsewhere as the royals. This city deserves better. We are ready to go. We have strike while iron is hot.
Click to expand...

The league can't force them to sell. It's not like MLB.
 
If those comments from Stern don't make a person get the idea he is going to put pressure on the Maloofs to sell, I'm not sure what will. A direct threat to pull their revenue sharing by vote amounts to making life very uncomfortable for the Maloofs. He would not say that if that was an empty threat.

The 200 million in debt is now pretty much the obstacle in the way of selling the team as well as the arena. So looking at this a different way, maybe the Plan B to build the arena downtown without the Kings makes some sense. Instead of the city trying to get around the issue of being in competition with Arco arena clause in the loan, they intend to violate it on purpose and assume the 65 million in debt on the loan. That way the city breaks ground on a new area, which is their goal. The risk of of the Maloofs leaving town and defaulting is more than a possibility, it's a real risk for the city eventually anyway.

Tough pill to swallow to take that debt off the Maloofs, but it is a situation changer for all involved. The city has a new arena and the Maloofs are still stuck at Arco with little chance of making money in Arco beyond Kings games. But with a big chunk of the 200 million free, the Maloof could sell the team and make a bit of a profit. The new owner comes in and new deal for the Kings to play in the new arena is struck. Probably with a provision that the Arco land is transferred to the city as compensation for triggering the clause in the loan by building a new arena.

This idea has a lot of moving parts, but I think there are more good things that could result from taking the penalty of Plan B than doing nothing and waiting for the Maloofs to be forced out.
 
Purple Reign said:
As much as I appreciate the comments from the Commissioner, I feel that this situation is far from over and the public fallout will get worst before it gets better. THE LEAGUE CAN NOT FORCE THIS OWNERSHIP OUT. If that was the case, Donald Sterling would have been gone years ago.
Click to expand...

One big difference between Donald Sterling and the Maloofs: Sterling was cheap but not broke.
 
VF21 said:
One big difference between Donald Sterling and the Maloofs: Sterling was cheap but not broke.
Click to expand...

..... and the fans of LA were not depreived of a great team. The fans' perception is a little different even if Sterling's mind set is the same.

I expect a sale. Granted the league legally cannot force them to stay, can't force them to sell, can't force them to do much of anything but the league can sure make life hell for the Maloofs. The family has hurt the pride of a rightfully prideful man. Better put, George has done it although I may be quibbling as everyone else kept silent as he made a fool of himself. Perhaps other teams have been guided, helped, call it what you may as much as the Kings but it's darn few. Stern busted the NBA's hump to help them and every penny he paid to help the Maloofs and the City get this deal done came out of the pockets of the other NBA owners. Maybe this is pocket change. Makes no difference. It's the principle of the thing and Stern is a principled man.

He has been around since Moses so people may not remember how he has helped transform this league but his ideas have made the owners and players rich.

Any bets on how long the Maloofs last? I don't even know why they'd want to stay in the NBA business. The intyernal pressure on the family must be immense and momma must be frustrated by her children. Imagine her feelings. Yikes!

I envison a sale with the NBA kicking in a little money to sweeten the pot and get the deal going.
 
So here is the quick list of the people the Maloofs have seriously angered in the past 1 month:

David Stern
Many of the Kings most loyal fans
Chris Lehane
Darrel Steinberg
Mayor Kevin Johnson
Most of the city council
AEG
David Taylor

I would not want to be in the doghouse with any one of those people/entities, let alone all of them. Their bad moves will cost them dearly I predict. Saying yes to the deal of course carried risks for them. Saying "no," and the manner in which they said no carries far more risks IMHO.

I would absolutely love it if KJ, David Taylor and AEG continued to talk and figure out how they can get this done without the 73 million contribution form the Maloofs. It would still be great for the city to get this thing built. Also, without the Kings in the place, that frees up 45-50 nights per year for AEG to book other prime time events, just like they do in KC. Maybe AEG can contribute more now that they are looking at more nights to book, perhaps an additional investor? I don't know. I just want this project to happen for downtown. It really needs it.
 
JB_kings said:
If those comments from Stern don't make a person get the idea he is going to put pressure on the Maloofs to sell, I'm not sure what will. A direct threat to pull their revenue sharing by vote amounts to making life very uncomfortable for the Maloofs. He would not say that if that was an empty threat.

The 200 million in debt is now pretty much the obstacle in the way of selling the team as well as the arena. So looking at this a different way, maybe the Plan B to build the arena downtown without the Kings makes some sense. Instead of the city trying to get around the issue of being in competition with Arco arena clause in the loan, they intend to violate it on purpose and assume the 65 million in debt on the loan. That way the city breaks ground on a new area, which is their goal. The risk of of the Maloofs leaving town and defaulting is more than a possibility, it's a real risk for the city eventually anyway.

Tough pill to swallow to take that debt off the Maloofs, but it is a situation changer for all involved. The city has a new arena and the Maloofs are still stuck at Arco with little chance of making money in Arco beyond Kings games. But with a big chunk of the 200 million free, the Maloof could sell the team and make a bit of a profit. The new owner comes in and new deal for the Kings to play in the new arena is struck. Probably with a provision that the Arco land is transferred to the city as compensation for triggering the clause in the loan by building a new arena.

This idea has a lot of moving parts, but I think there are more good things that could result from taking the penalty of Plan B than doing nothing and waiting for the Maloofs to be forced out.
Click to expand...

This is spot on and what I took from the article. If we can get an arena built, we put pressure on the Maloofs on that end and Stern and the league will be putting even more pressure on their end.

The question I have about plan B is how much cheaper is it to build without the Maloofs? Thy don't have to build the extra parking garage and they would not have to immediately build a practice facility. I believe I remember a practice facility being part of the arena. If not, someone can correct me. But otherwise, the city starts to save money on the front end construction. Maybe there are other amenities or perks that don't have to built in if the Maloofs are not tenants. So now the arena doesn't cost $390 mil anymore. The key is filling the other 45 dates that the Kings would otherwise occupy. If AEG can help work that out, I think we could still be in business.

Have to break ground on the arena in order to get the full weight of the situation on the Maloofs though.
 
I wonder if the Maloofs knew that the revenue sharing they were "entitled" to could be vetoed. Wonder if that changes their plans to keeping this team a minimum payroll for the near future.
 
kupman said:
So here is the quick list of the people the Maloofs have seriously angered in the past 1 month:

David Stern
Many of the Kings most loyal fans
Chris Lehane
Darrel Steinberg
Mayor Kevin Johnson
Most of the city council
AEG
David Taylor

I would not want to be in the doghouse with any one of those people/entities, let alone all of them. Their bad moves will cost them dearly I predict. Saying yes to the deal of course carried risks for them. Saying "no," and the manner in which they said no carries far more risks IMHO.

I would absolutely love it if KJ, David Taylor and AEG continued to talk and figure out how they can get this done without the 73 million contribution form the Maloofs. It would still be great for the city to get this thing built. Also, without the Kings in the place, that frees up 45-50 nights per year for AEG to book other prime time events, just like they do in KC. Maybe AEG can contribute more now that they are looking at more nights to book, perhaps an additional investor? I don't know. I just want this project to happen for downtown. It really needs it.
Click to expand...

You left out the other NBA owners and, the prospective parking companys who were going to bid and Inland. Hey maybe Jerry Brown too with his high speed rail project too.
 
Livinthedream said:
This is spot on and what I took from the article. If we can get an arena built, we put pressure on the Maloofs on that end and Stern and the league will be putting even more pressure on their end.

The question I have about plan B is how much cheaper is it to build without the Maloofs? Thy don't have to build the extra parking garage and they would not have to immediately build a practice facility. I believe I remember a practice facility being part of the arena. If not, someone can correct me. But otherwise, the city starts to save money on the front end construction. Maybe there are other amenities or perks that don't have to built in if the Maloofs are not tenants. So now the arena doesn't cost $390 mil anymore. The key is filling the other 45 dates that the Kings would otherwise occupy. If AEG can help work that out, I think we could still be in business.

Have to break ground on the arena in order to get the full weight of the situation on the Maloofs though.
Click to expand...

The biggest factor in building w/o the Maloofs is the current bond loan could be voided.
 
Section 101 said:
The biggest factor in building w/o the Maloofs is the current bond loan could be voided.
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The Maloofs are going to walk away from it anyways. It's why one of their "red line" items was having collateral on the refinanced loan. They have no intention whatsoever of paying.
 
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I'd love to get an arena deal done without the Maloofs. However, it'd be a real hard sell for the city council to pass it without an anchor tenant IMO.

Tough sell.
 
Livinthedream said:
The Maloofs are going to walk away from it anyways. It's why one of their "red line" items was having collateral on the refinanced loan. They have no intention whatsoever of paying.
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In his phone call with Grant yesterday, George Maloof said that there is currently collateral on the loan and that they just didn't feel they would need to put up additional collateral for a refi.

Question: Is Arco/PBP and the land it sits on the current collateral?
 
Livinthedream said:
This is spot on and what I took from the article. If we can get an arena built, we put pressure on the Maloofs on that end and Stern and the league will be putting even more pressure on their end.

The question I have about plan B is how much cheaper is it to build without the Maloofs? Thy don't have to build the extra parking garage and they would not have to immediately build a practice facility. I believe I remember a practice facility being part of the arena. If not, someone can correct me. But otherwise, the city starts to save money on the front end construction. Maybe there are other amenities or perks that don't have to built in if the Maloofs are not tenants. So now the arena doesn't cost $390 mil anymore. The key is filling the other 45 dates that the Kings would otherwise occupy. If AEG can help work that out, I think we could still be in business.

Have to break ground on the arena in order to get the full weight of the situation on the Maloofs though.
Click to expand...

Interesting thought. Without the extra parking and practice facility and maybe some of the office spaces? I doubt you could trim $73 million though.
 
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