The Loan

J

JB_kings

Starter
Ok here is the most detail I've heard on the conditions of the loan:

http://www.sacbee.com/2011/02/26/3432174/qa-whats-up-with-the-kings.html

What if the Kings leave town and don't pay the city loan?
The loan terms require the Kings to pay off the $67 million in full, plus a $9 million prepayment penalty, if they vacate the arena. If for some reason they don't pay, the city can take ownership of the arena and would get a $25 million ownership stake in the team. The city would, however, be on the hook to pay off the bond buyers who provided the original loan money.


Read more: http://www.sacbee.com/2011/02/26/3432174/qa-whats-up-with-the-kings.html#ixzz1F5sRIlh3​

If they vacate the arena, they have to pay up 76 million dollars. 67+9 million penalty.

Now the ownership stake is something I haven't heard anything about. Who's shares does this stake come from? I bet none of the limited partners are selling theirs.

Lots of interesting stuff here. Very complicated.
 
This is what I've been talking about. Seattle fought like hell before their mayor sold out and agreed to a lease settlement with Clay Bennett.

Sometimes, you fight and win. There was the article in the Bee that talked about how the Giants were all set for Tampa Bay in '92 until some lawyers busted open the lease and saw some loopholes.

Sacramento really needs to put some pressure on the Maloofs to pay off that loan. Who knows, maybe Samueli goes back to his original offer of paying off the loan but considering that he is already going to let them play rent free and will undoubtedly be losing some of his own Duck fanbase, you have to wonder how much he is willing to help out.
 
JB_kings said:
Ok here is the most detail I've heard on the conditions of the loan:

http://www.sacbee.com/2011/02/26/3432174/qa-whats-up-with-the-kings.html

What if the Kings leave town and don't pay the city loan?
The loan terms require the Kings to pay off the $67 million in full, plus a $9 million prepayment penalty, if they vacate the arena. If for some reason they don't pay, the city can take ownership of the arena and would get a $25 million ownership stake in the team. The city would, however, be on the hook to pay off the bond buyers who provided the original loan money.


Read more: http://www.sacbee.com/2011/02/26/3432174/qa-whats-up-with-the-kings.html#ixzz1F5sRIlh3​

If they vacate the arena, they have to pay up 76 million dollars. 67+9 million penalty.

Now the ownership stake is something I haven't heard anything about. Who's shares does this stake come from? I bet none of the limited partners are selling theirs.

Lots of interesting stuff here. Very complicated.
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I may be misreading what was printed, but my interpretation of of the ownership stake was that would only happen if the Maloofs defaulted on the loan and that if they continued to operate the arena even without the Kings as tenants they could just go on paying the loan as if nothing happened. I guess that would be in the fine print what "vacate" means. Could they operate the arena with a skeleton crew drawing some shows and keep losses to a minimum and postpone the repayment of the loan?
 
whozit said:
I may be misreading what was printed, but my interpretation of of the ownership stake was that would only happen if the Maloofs defaulted on the loan and that if they continued to operate the arena even without the Kings as tenants they could just go on paying the loan as if nothing happened. I guess that would be in the fine print what "vacate" means. Could they operate the arena with a skeleton crew drawing some shows and keep losses to a minimum and postpone the repayment of the loan?
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As I said, complicated. But I bet if there is a clause that invokes the 25 million stake to the city of Sacramento, it's what they are going to avoid triggering at all costs. I really don't think the city wants to end up owning the arena either. I'm guessing that battle goes to court with a settlement offer of lump sum payments back of the loan over a 5 years? And maybe that matches up to the rent free for 5 seasons? But thanks to all this posturing and finger pointing, it's not going to be a quick settlement.
 
Hey, JB! I read that hi-lighted portion today too and wondered about it as well. Kind of got a sinking feeling though wondering about whether they could just walk away from the loan leaving us holding the crumbling Arena not worth anything close to what it once was worth, and a 5 to 10 percent interest in the Anaheim Kings.:eek:
 
I think KJ needs to have the lawyers really look it over. My question is do they have to repay the loan before they can file for relocation?
 
I'm not one who enjoys reading legal documents, but that terms of the loan is one I would be love to spend some time reading.

I can't imagine Stern allowing them to run out on the loan and let the arena default to the city. I would take the Maloofs to the wood shed for that one because it's a black eye on the league to have their owners behaving that way. Does the NBA have any influence in that? You bet. Remember the vote of league owners to approve the move. What Stern advises the owners to do carries great weight.

The city wants the loan and penalty paid so they aren't on the hook for Arco and making loan payments. Owning a stake in the Kings only means something to them if they can sell it for cash. And is that stake big enough to overtake the majority ownership if they partner with Cook, Benvenuti and the other minority partners? Interesting subplot. So in a nutshell, a lot of nasty things can kick in if they don't pony up 76 million to the City if they leave.

I would think the Maloofs are aware of this and their plan is to pay off the city in lump sum or negotiate a payback. But the lack of communication going on right now doesn't appear to be making the city leaders happy. So they might get a big fat middle finger stuck in their face if the want to negotiate a payback.
 
Purple Reign said:
Anaheim is going to let the team lease rent free? There is no way Sacramento can compete with "rent free"!
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That's one of the current rumored offers from Samueli. Free rent for 5 years at the Honda Center. I don't know what rent would be, but the Maloofs had 10 million a year in mind for their dealings with the arena here. It could be in that ballpark.
 
JB_kings said:
I'm not one who enjoys reading legal documents, but that terms of the loan is one I would be love to spend some time reading.

I can't imagine Stern allowing them to run out on the loan and let the arena default to the city. I would take the Maloofs to the wood shed for that one because it's a black eye on the league to have their owners behaving that way. Does the NBA have any influence in that? You bet. Remember the vote of league owners to approve the move. What Stern advises the owners to do carries great weight.

The city wants the loan and penalty paid so they aren't on the hook for Arco and making loan payments. Owning a stake in the Kings only means something to them if they can sell it for cash. And is that stake big enough to overtake the majority ownership if they partner with Cook, Benvenuti and the other minority partners? Interesting subplot. So in a nutshell, a lot of nasty things can kick in if they don't pony up 76 million to the City if they leave.

I would think the Maloofs are aware of this and their plan is to pay off the city in lump sum or negotiate a payback. But the lack of communication going on right now doesn't appear to be making the city leaders happy. So they might get a big fat middle finger stuck in their face if the want to negotiate a payback.
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This is correct. There is no way Stern is going to let the Maloofs flee from the loan or otherwise avoid it. All of these things are being considered by the Maloofs and their people as they explore the option of moving now. Stern orchestrates everything beyond the actual decision to move. He isn't going to tell the Maloofs they cannot move given the state of flux the arena issue has been in during this time. So once the decision has been made by the Maloofs to go, if that decision is actually made, Stern will find a way to make it as palatable to all concerned as he can. It's called spin and orchestration. He thinks he is good at it. He isn't. We see right through it. But it is what it is.
 
JB_kings said:
That's one of the current rumored offers from Samueli. Free rent for 5 years at the Honda Center. I don't know what rent would be, but the Maloofs had 10 million a year in mind for their dealings with the arena here. It could be in that ballpark.
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I am actually confused. I thought the Maloofs owned the arena but had a bond issue/loan they were paying off. They can't pay rent to themselves or is this one of those super complicated deals that give me a headache?
 
Glenn said:
I am actually confused. I thought the Maloofs owned the arena but had a bond issue/loan they were paying off. They can't pay rent to themselves or is this one of those super complicated deals that give me a headache?
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I think they meant The Maloofs would pay 10 million in a new Sacramento arena, not Arco.
 
JB_kings said:
I can't imagine Stern allowing them to run out on the loan and let the arena default to the city. I would take the Maloofs to the wood shed for that one because it's a black eye on the league to have their owners behaving that way. Does the NBA have any influence in that? You bet. Remember the vote of league owners to approve the move. What Stern advises the owners to do carries great weight.
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On the other hand, where was the NBA when the Warriors ownership refused to pay their rent for the better part of a decade? You couldn't get a cent out of them without suing, and then it would still take years. If the NBA uttered so much as a "tsk" over that, I never heard about it.
 
fnordius said:
On the other hand, where was the NBA when the Warriors ownership refused to pay their rent for the better part of a decade? You couldn't get a cent out of them without suing, and then it would still take years. If the NBA uttered so much as a "tsk" over that, I never heard about it.
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Good point. But I think that Stern wasn't looking the other way. In this case he didn't have a pending vote to approve a move. He had to get out Cohan out as owner and come up with a list of owners who would step in and keep the team going in Oakland. This was not on Larry Ellison's agenda. He was seeking to move the team to San Jose. As witnessed by the sale process, Larry was frozen out at about every turn. Getting rich people lined up to buy an NBA team is not an easy task and when you have an 800 pound gorilla in Larry to compete with, you tend to just stay out because it means you have to outbid a guy who hates being topped.

Back to the Kings. If this move is coming, then Stern has to be on his A game for spin control. Most of the previous situations like Seattle had nothing going with a new arena and weren't even trying. If KJ plays his cards right, he will stop pointing fingers and start putting cards on the table to show that the city is green lighting a new facility. This IMO, is the only way to get the Maloofs and the NBA off of offense and back on defense. How does it look to leave a city that is doing what you asked it to do? The previous decade plus of frustration and "too little - too late" will be defused by this approach. It's Sacramento's only winning card to play at this point. Any other move is an losing one.
 
JB_kings said:
Back to the Kings. If this move is coming, then Stern has to be on his A game for spin control. Most of the previous situations like Seattle had nothing going with a new arena and weren't even trying. If KJ plays his cards right, he will stop pointing fingers and start putting cards on the table to show that the city is green lighting a new facility. This IMO, is the only way to get the Maloofs and the NBA off of offense and back on defense. How does it look to leave a city that is doing what you asked it to do? The previous decade plus of frustration and "too little - too late" will be defused by this approach. It's Sacramento's only winning card to play at this point. Any other move is an losing one.
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Excellent points made.

Some people tend to forget that April 14-15 is not D-Day (Decision Day). It's just when the NBA will meet and one of the topics to be discussed will be the Sacramento Kings arena issue and Anaheim (and any other cities, if any).

The NBA and Maloofs could return for a final decision in June.

The 90 days given to Taylor/ICON is just a number. If they can get something together before the 90 days (April 14-15 would be great), then your points makes a whole lot of sense.
 
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