Va. Gov. McDonnell's budget proposal to exclude funding to lure NBA team to Va. Beach

[Section 101]

I could easily be mistaken, but isn't there a proviso with the revenue sharing whereby team owners who receive the funds can have it yanked if they do not use it for the team?

This is why we are at the cap now instead of the minimum.

 

[Jose]

This is why we are at the cap now instead of the minimum.

Being at the cap doesn't really matter when it comes to revenue sharing. It may help with appearances, but the benchmark for revenue sharing is generated revenue. There is also no provision on how the money can be used. The Maloofs may choose to be at the cap to "show" that they're trying, but the real impact on their part of the revenue sharing comes from meeting the league's goals.

All teams are expected to contribute to the revenue sharing pool - an amount approximately 50% of their revenue (minus certain expenses). That pool is to be divided equally among all teams. Thus, the teams with lowest revenue get a bigger chunk of money than what they contributed and teams with higher revenue get less than what they contributed.

When the revenue sharing system is fully implemented in the 13-14 season, the Kings are in line to receive a gain of $16M (the max) in yearly revenue sharing. HOWEVER, this is based on the Kings meeting the "small market" performance benchmark of 70% of the league's average team revenue. Otherwise, they have to make up the difference in their contribution to the pool with their own money BEFORE they get a cut of the revenue sharing pool.

In other words, if the Kings put a horrible product on the floor and revenue drops because people stop going and sponsorships dry up, then it will not only affect their revenue but it will also affect their revenue sharing. This is why the Maloofs keep the threat of relocation alive - so people continue to support the team in fear that they "may leave" and, at the same time, contributing not only direct revenue but also helping them meet the 70% requirement so they get their nice revenue sharing check.

This game will go on forever, as long as people in Sacramento play along. At some point, fans will have to take a stand so the Maloofs either sell the team or leave for good. That, or eventually fan support will dwindle and people will no longer be interested in the team in which case they will file for relocation and have the numbers to prove that Sacramento cannot support a team.

The longer they "survive" with low attendance and the revenue sharing boost, the better their case is going to be when they go to the BOG and ask to relocate.

 

[JB_kings]

Being at the cap doesn't really matter when it comes to revenue sharing. It may help with appearances, but the benchmark for revenue sharing is generated revenue. There is also no provision on how the money can be used. The Maloofs may choose to be at the cap to "show" that they're trying, but the real impact on their part of the revenue sharing comes from meeting the league's goals.

All teams are expected to contribute to the revenue sharing pool - an amount approximately 50% of their revenue (minus certain expenses). That pool is to be divided equally among all teams. Thus, the teams with lowest revenue get a bigger chunk of money than what they contributed and teams with higher revenue get less than what they contributed.

When the revenue sharing system is fully implemented in the 13-14 season, the Kings are in line to receive a gain of $16M (the max) in yearly revenue sharing. HOWEVER, this is based on the Kings meeting the "small market" performance benchmark of 70% of the league's average team revenue. Otherwise, they have to make up the difference in their contribution to the pool with their own money BEFORE they get a cut of the revenue sharing pool.

In other words, if the Kings put a horrible product on the floor and revenue drops because people stop going and sponsorships dry up, then it will not only affect their revenue but it will also affect their revenue sharing. This is why the Maloofs keep the threat of relocation alive - so people continue to support the team in fear that they "may leave" and, at the same time, contributing not only direct revenue but also helping them meet the 70% requirement so they get their nice revenue sharing check.

This game will go on forever, as long as people in Sacramento play along. At some point, fans will have to take a stand so the Maloofs either sell the team or leave for good. That, or eventually fan support will dwindle and people will no longer be interested in the team in which case they will file for relocation and have the numbers to prove that Sacramento cannot support a team.

The longer they "survive" with low attendance and the revenue sharing boost, the better their case is going to be when they go to the BOG and ask to relocate.

I think there is a dollar for dollar reduction on revenue sharing for teams under the cap. So if the team is one million under the cap, their revenue share is reduced by one million. It was designed exactly to prevent any owners from keeping their salary cap low to cut expenses.

 

[Bricklayer]

I could easily be mistaken, but isn't there a proviso with the revenue sharing whereby team owners who receive the funds can have it yanked if they do not use it for the team?

Sure, but that's what I was getting at. They can get the money from the league, avoid ever going into the red for owning the Kings by spending the revenue sharing money to make up any shortfalls, and hang onto the team with the Kings not generating any financial pressure on them to sell. Meanwhile historically NBA franchises have been assets which have appreciated dramtically thorugh the years, although you would have to think there's a cap to that somewhere out there.

Just as big, I think people forget, or more likely WANT to forget just how important the Kings are to the Maloofs emotionally. This was never a business decision. Remember they grew up with their dad owning a team, and considered him selling it to be the biggest mistake of his career. They wanted one back the way a kid who never got that bicycle keeps on dreaming of getting one once he grows up and has money of his own. Then they get the team, get all kinds of press and fame, start appearing in rap videos with silcon enhanced hoties hanign on their arms in biknis etc. And now people expect them to give all that up and just go back to being random rich schmoes? These guys are dumb and shallow and grew up spoiled. They already lost their casino toy, hell if they are going to lose their sports toy and repeat their dad's mistake. Its like expecting a guy who grew up surfing and goes out every day to willingly move to Nebraska because property values are cheaper and its the smart financial move.

Like I say, outside financial pressures could force them to sell. If they are somehow bleeding so much money outside of the NBA that they need the Kings to generate lots of revenue outflow to keep them afloat, that can't happen becuase of the rules on the uses of revenue sharing. But I'm not sure what would be draining them like that anymore, because they don' town anything anymore. As far as I know just some Wells Fargo stock, a basketball team that probably breaks even with a little help from the other owners, and some random reality TV/skateboarding type of nonsense entertainment stuff down in L.A. They remain relelvant only so long as they keep the Kings, and in some ways the depth of their financial disaster is concealed. If they sell the Kings, by the time they get done paying off all the associated debts they walk away with less than $100mil, in dramatically lessened cirucmstances, and with no reasonable hope of ever being able to re-reverse their dad's mistake and buy back in again.

 

[Section 101]

Sure, but that's what I was getting at. They can get the money from the league, avoid ever going into the red for owning the Kings by spending the revenue sharing money to make up any shortfalls, and hang onto the team with the Kings not generating any financial pressure on them to sell. Meanwhile historically NBA franchises have been assets which have appreciated dramtically thorugh the years, although you would have to think there's a cap to that somewhere out there.

Just as big, I think people forget, or more likely WANT to forget just how important the Kings are to the Maloofs emotionally. This was never a business decision. Remember they grew up with their dad owning a team, and considered him selling it to be the biggest mistake of his career. They wanted one back the way a kid who never got that bicycle keeps on dreaming of getting one once he grows up and has money of his own. Then they get the team, get all kinds of press and fame, start appearing in rap videos with silcon enhanced hoties hanign on their arms in biknis etc. And now people expect them to give all that up and just go back to being random rich schmoes? These guys are dumb and shallow and grew up spoiled. They already lost their casino toy, hell if they are going to lose their sports toy and repeat their dad's mistake. Its like expecting a guy who grew up surfing and goes out every day to willingly move to Nebraska because property values are cheaper and its the smart financial move.

Like I say, outside financial pressures could force them to sell. If they are somehow bleeding so much money outside of the NBA that they need the Kings to generate lots of revenue outflow to keep them afloat, that can't happen becuase of the rules on the uses of revenue sharing. But I'm not sure what would be draining them like that anymore, because they don' town anything anymore. As far as I know just some Wells Fargo stock, a basketball team that probably breaks even with a little help from the other owners, and some random reality TV/skateboarding type of nonsense entertainment stuff down in L.A. They remain relelvant only so long as they keep the Kings, and in some ways the depth of their financial disaster is concealed. If they sell the Kings, by the time they get done paying off all the associated debts they walk away with less than $100mil, in dramatically lessened cirucmstances, and with no reasonable hope of ever being able to re-reverse their dad's mistake and buy back in again.

Like Jose said there is a marketing revenue threshold as well. If they don't meet it then they loose revenue too. Right now they have tarnished the market. Only way to fix it to sell the team, new arena, or put a winner on the court. Which do you think they are capable of doing?

 

[Glenn]

Like Jose said there is a marketing revenue threshold as well. If they don't meet it then they loose revenue too. Right now they have tarnished the market. Only way to fix it to sell the team, new arena, or put a winner on the court. Which do you think they are capable of doing?

They have already said they won't sell the team and they have turned down a sweetheart deal to build an NBA arena that meets NBA standards. They don't have the money to win. I think sooner or later they will be backed into a corner and have to sell despite the fact that their egos seem to be attached to ownership. That's quite a question, Section 101, because "none of the above" seems to be the best answer. If they are dependent on an outside entity (government) to even afford the NBA fees, they are sucking badly financially. Maybe this has all been discussed.

I don't know the NBA's revenue sharing rule but I doubt if it fully makes up for losses. There has to be some incentive built into this revenue sharing to encourage owners to move from the bottom of the league. That's a guess but it makes sense.

Now, to get it back a little to the game of basketball, I think there only hope is that their young players mature into being a great team and I think that is entirely possible. If the arena starts to fill up, they will have money at which point I hope the NBA puts pressure on them to sign the arena deal.

BTW, does anyone know how long a team can play in an arena that is below NBA standards? Perhaps the standards are only guidelines and nothing enforceable.

WE ARE VICTIMS, DAMN IT!

 

[kennadog]

Minor point. The Maloofs dad did not sell the team. The family sold the rockets after the elder Maloof died.