What do the Maloof's want?

Uncia03

Uncia03

Starter
So the Maloofs are basically saying that the Term Sheet agreed upon in Orlando was bad for the Maloofs, the NBA, and the City of Sacramento.

They then edited the Term Sheet to something which they would then sign off on.
In theory, if their concern was with the Maloofs, the NBA, and the City of Sacramento, then this new Term Sheet should be expected to make things better for all parties.

I wanted to look at what they say they want and then examine their Term Sheet which they would agree to in order to get the deal done.

I think it's very important to understand the objections that the Maloofs are making. They basically said that they never agreed to all the terms in the Orlando Term sheet, and that they sent their terms to the City by way of the NBA, and that their terms were never incorporated into the Term Sheet.

The Maloofs basically said that they couldn't work with the City, if the City never got back to them regarding their concerns.

Here is what I think happened: I believe that the Maloof's brought up most of these points to the NBA. The NBA and City through their negotiations on this deal found these terms to not be good for the over-all deal. So they dropped those terms and proceeded to move on to other issues.

I'm assuming this to be the case because when I read the red-lined term sheet the Maloofs wanted to have approved I see a comment from the City Negotiator saying "Issue has been raised and discussed with NBA (and Kings) on numerous occasions."

So with that assumpion in place I want to break down the changes to the Orlando Term Sheet into two different sections.
Section 1: Terms Maloofs are insisting upon even though all parties negotiated and found the Maloof terms unacceptable.
Section 2: New terms the Maloofs are raising on the Revised Term Sheet.

After we look at both sections I want to examine what the Maloofs say they want, i.e. a deal which will be economically feasible for the Maloofs, the NBA, and the City of Sacramento, and see if what they say matches the changes that they would be willing to agree to in order to make this deal happen.

Section 1: Terms Dropped in Negotiations but now Insisted upon by the Maloofs

1. No collateral on new bonds to pay off 1997 Lease Revenue Bonds
2. Kings not paying any Pre-development costs
3. Kings not paying any Cost Overruns
4. Kings being able to relocate prior to end of agreement (30 year agreement)
5. Kings not locked into a 30 year agreement (Probably want 10-15 year deal)
6. Kings not paying game day operating expenses in connection with Kings Events
7. AEG paying for access to premium Seating Parking. (This is so AEG can charge later?)
8. Kings not paying for Municipal Services (Police/Traffic Control, Fire Prevention, ect.)

Section 1: New Terms added

1. Kings having final say on design, development, & construction issues which effect the Kings
2. Kings being able to use ESC for Practices and other Team Events free of charge
3. Kings get sign-off on all terms for arena signage and naming rights
4. Kings not paying City taxes or assessments of general applicability while using ESC
5. New owners would not be subject to abide by agreed-upon term sheet
6. Kings would get MSE suite. Suite could be used for all ESC events, not just Kings events
7. Benchmarks - Kings wanted timelines for getting things completed. If timeline not met they wanted to "terminate the definitive agreements and its obligations thereunder without any liability to any party"

Comparing Term Sheet Changes to Maloof's Insistance that they are trying to help the City and the NBA

There are other items and changes, but these are all the big ones.

When I examine the terms which had already been negotiated I see the following:
Terms 1.3, 1.6, 1.8 basically make the Kings more money while making either the City or AEG have to cover those costs. So these help the Kings but hurt either the City or AEG.

Terms 1.1, 1.2, 1.4, 1.5 all reduce the risk of the Kings and give them flexibility to leave the area while creating more risk for the City.
These items help the Kings but hurt the City.

Term 1.7 has to do with AEG and premium parking. I'm not clear on this item though the City Negotiator says that Premium Parking will not be constructed with-out it, so I'm guessing that it adds to Security for the City and helps AEG somehow. Maybe if they pay for access, they can then charge the public for access. Perhaps someone can clarify this point for me.

Terms 2.1 & 2.3 basically give more control to the Maloofs as far how things will be designed, constructed, and implemented. It appears to me that term 2.3 is negotiable, but it would be difficult to work Term 2.1 because it would be impossible to clearly deliniate what was a matter 'Effecting the Kings' versus a matter which was non-King related.

Terms 2.2 & 2.4 basically is a cost savings to the Maloofs. They want to use the ESC for Practices and other Team Events free of charge and they don't want to have to pay City taxes for revenue obtained while using the ESC.
Obviously AEG would be the one to lose out if the Maloofs didn't have to pay for ESC use and the City would lose out if operators of the ESC did not have to pay City taxes for revenue from the ESC use.

Term 2.6 is a perk that the Maloofs are requesting. They want a 'MSE exclusive suite' including premium parking that they can use for any event at the ESC at any time. I'm sure that this one is negotiable, but the City Negotiator said that they'd have to negotiate this with AEG. Which makes sense, as this item would directly cut into AEG's revenue.

Terms 2.5 & 2.7 are scary additions and in my mind Term 2.5 is probably the worst of all the terms. Term 2.5 basically says that if the Maloofs sell the team, the new owner is not obiligated to the Term Sheet. Why in the world would you put that in there unless you not only had plans on selling, but had discussions with potential buyers, and you gave assurances that they would not have to be 'stuck in Sacramento'.
Term 2.7 is also scary, because it basically says that if certain items are not completed by an agreed-upon date, the Kings can just walk away from the whole project, with-out consequences. So the things could get half-way built, and then they could walk away if somehow things came up which prevented a timeline to be met.

Conclusion

After examining the Term Sheet the Maloofs said they would be willing to sign off on, and then comparing that to their statement that this deal would be bad for the Maloofs, the NBA, and the City of Sacramento, I have to say that their intent does not match up with their statement.

Almost every single provision they want changed or included reduces their costs and their financial risk, adds to their control over the project, and gives them the flexibility to leave the area, sell the team, or stop participating in the project.

At the same time their changes and inclusions greatly increases the financial risk to the City of Sacramento, while reducing the revenue for both AEG and the City of Sacramento.

It's clear that the Maloofs might say they want one thing, but in reality they are looking for a deal which has little-to-know risk on their part while guaranteeing flexibility and revenue at the cost of the City of Sacramento and it's partners.

I'm not certain if any other conclusion can be had, but I'd be curious if someone is seeing this differently. Also, if someone familiar with the Premium Parking and AEG's obligation could clarify that point, I'd appreciate it.
 
They want the city to hand them an arena free and clear that they can abandon at any time just like the good old days in the 90s-early 00s. Those days are long friggin gone and probably will never come back.
 
That's a great breakdown. You can't say you are protecting the city and make demands that will destroy the city. It's the same as last year. The league told them to wait a year, so they waited a year. The league almost got them to take a deal here. Now, they are done. They've killed the deal and they are leaving town ASAP.

They want to:
1. To move the team to Anaheim and take the loan from the Ducks owner
2. Take that money to cover a small relocation fee and use the remaining funds money buy back some of the Palms, they have the option to do that for a period of time.
3. Make lots of money on the Anaheim Royals and Palms.
4. Pay off the loan to the Ducks owner
5. Have it be like the good old days.

After the roar dies down and things get uncomfortable enough for the NBA, they will move the team to Anaheim with a lawsuit if needed. The legal fight and/ or relocation fee will be so significant that Georgie isn’t buying back any Palms shares. The Ducks owners will get the team. The Maloofs won’t have the Kings or Palms, but will live very comfortably by selling off chunks of the Wells Fargo stock. Sacramento gets screwed out of a team by bad owners.
 
If you want more double speak, Grant is saying the city should just move the deal out to Natomas. The city should use the money from increased parking money associated with a DOWNTOWN ARENA and spend those dollars on a new Natomas arena that won't impact downtown parking. That makes sense.
 
It makes perfect sense. Private investors will still pay $255 million to operate the downtown parking lots, even though there's no arena and nobody parking downtown at night, and then all of that money can just go free and clear to build a new arena next to PBP. Grant should be the Maloof's new economist.

This is what makes the whole Natomos thing unrealistic-- there's no way to fund a new arena there.
 
Dreamtiger said:
It makes perfect sense. Private investors will still pay $255 million to operate the downtown parking lots, even though there's no arena and nobody parking downtown at night, and then all of that money can just go free and clear to build a new arena next to PBP. Grant should be the Maloof's new economist.

This is what makes the whole Natomos thing unrealistic-- there's no way to fund a new arena there.
Click to expand...

But there are already roads and parking lot out there. What are you stupid? It's way easier to build an arena in Natomas without any way to fund it.
 
Well the boys always seem to have people lining up to loan them money. You know because they are so good with being developers and stuff...

I suggest George have a chat with Leonard Padilla. He has a billionaire friend that keeps arena money as pocket change and he would just give them that money. Then they can have milk and lay down for story time.
 
Uncia03 said:
So the Maloofs are basically saying that the Term Sheet agreed upon in Orlando was bad for the Maloofs, the NBA, and the City of Sacramento.

They then edited the Term Sheet to something which they would then sign off on.
In theory, if their concern was with the Maloofs, the NBA, and the City of Sacramento, then this new Term Sheet should be expected to make things better for all parties.

I wanted to look at what they say they want and then examine their Term Sheet which they would agree to in order to get the deal done.

I think it's very important to understand the objections that the Maloofs are making. They basically said that they never agreed to all the terms in the Orlando Term sheet, and that they sent their terms to the City by way of the NBA, and that their terms were never incorporated into the Term Sheet.

The Maloofs basically said that they couldn't work with the City, if the City never got back to them regarding their concerns.

Here is what I think happened: I believe that the Maloof's brought up most of these points to the NBA. The NBA and City through their negotiations on this deal found these terms to not be good for the over-all deal. So they dropped those terms and proceeded to move on to other issues.

I'm assuming this to be the case because when I read the red-lined term sheet the Maloofs wanted to have approved I see a comment from the City Negotiator saying "Issue has been raised and discussed with NBA (and Kings) on numerous occasions."

So with that assumpion in place I want to break down the changes to the Orlando Term Sheet into two different sections.
Section 1: Terms Maloofs are insisting upon even though all parties negotiated and found the Maloof terms unacceptable.
Section 2: New terms the Maloofs are raising on the Revised Term Sheet.

After we look at both sections I want to examine what the Maloofs say they want, i.e. a deal which will be economically feasible for the Maloofs, the NBA, and the City of Sacramento, and see if what they say matches the changes that they would be willing to agree to in order to make this deal happen.

Section 1: Terms Dropped in Negotiations but now Insisted upon by the Maloofs

1. No collateral on new bonds to pay off 1997 Lease Revenue Bonds
2. Kings not paying any Pre-development costs
3. Kings not paying any Cost Overruns
4. Kings being able to relocate prior to end of agreement (30 year agreement)
5. Kings not locked into a 30 year agreement (Probably want 10-15 year deal)
6. Kings not paying game day operating expenses in connection with Kings Events
7. AEG paying for access to premium Seating Parking. (This is so AEG can charge later?)
8. Kings not paying for Municipal Services (Police/Traffic Control, Fire Prevention, ect.)

Section 1: New Terms added

1. Kings having final say on design, development, & construction issues which effect the Kings
2. Kings being able to use ESC for Practices and other Team Events free of charge
3. Kings get sign-off on all terms for arena signage and naming rights
4. Kings not paying City taxes or assessments of general applicability while using ESC
5. New owners would not be subject to abide by agreed-upon term sheet
6. Kings would get MSE suite. Suite could be used for all ESC events, not just Kings events
7. Benchmarks - Kings wanted timelines for getting things completed. If timeline not met they wanted to "terminate the definitive agreements and its obligations thereunder without any liability to any party"

Comparing Term Sheet Changes to Maloof's Insistance that they are trying to help the City and the NBA

There are other items and changes, but these are all the big ones.

When I examine the terms which had already been negotiated I see the following:
Terms 1.3, 1.6, 1.8 basically make the Kings more money while making either the City or AEG have to cover those costs. So these help the Kings but hurt either the City or AEG.

Terms 1.1, 1.2, 1.4, 1.5 all reduce the risk of the Kings and give them flexibility to leave the area while creating more risk for the City.
These items help the Kings but hurt the City.

Term 1.7 has to do with AEG and premium parking. I'm not clear on this item though the City Negotiator says that Premium Parking will not be constructed with-out it, so I'm guessing that it adds to Security for the City and helps AEG somehow. Maybe if they pay for access, they can then charge the public for access. Perhaps someone can clarify this point for me.

Terms 2.1 & 2.3 basically give more control to the Maloofs as far how things will be designed, constructed, and implemented. It appears to me that term 2.3 is negotiable, but it would be difficult to work Term 2.1 because it would be impossible to clearly deliniate what was a matter 'Effecting the Kings' versus a matter which was non-King related.

Terms 2.2 & 2.4 basically is a cost savings to the Maloofs. They want to use the ESC for Practices and other Team Events free of charge and they don't want to have to pay City taxes for revenue obtained while using the ESC.
Obviously AEG would be the one to lose out if the Maloofs didn't have to pay for ESC use and the City would lose out if operators of the ESC did not have to pay City taxes for revenue from the ESC use.

Term 2.6 is a perk that the Maloofs are requesting. They want a 'MSE exclusive suite' including premium parking that they can use for any event at the ESC at any time. I'm sure that this one is negotiable, but the City Negotiator said that they'd have to negotiate this with AEG. Which makes sense, as this item would directly cut into AEG's revenue.

Terms 2.5 & 2.7 are scary additions and in my mind Term 2.5 is probably the worst of all the terms. Term 2.5 basically says that if the Maloofs sell the team, the new owner is not obiligated to the Term Sheet. Why in the world would you put that in there unless you not only had plans on selling, but had discussions with potential buyers, and you gave assurances that they would not have to be 'stuck in Sacramento'.
Term 2.7 is also scary, because it basically says that if certain items are not completed by an agreed-upon date, the Kings can just walk away from the whole project, with-out consequences. So the things could get half-way built, and then they could walk away if somehow things came up which prevented a timeline to be met.

Conclusion

After examining the Term Sheet the Maloofs said they would be willing to sign off on, and then comparing that to their statement that this deal would be bad for the Maloofs, the NBA, and the City of Sacramento, I have to say that their intent does not match up with their statement.

Almost every single provision they want changed or included reduces their costs and their financial risk, adds to their control over the project, and gives them the flexibility to leave the area, sell the team, or stop participating in the project.

At the same time their changes and inclusions greatly increases the financial risk to the City of Sacramento, while reducing the revenue for both AEG and the City of Sacramento.

It's clear that the Maloofs might say they want one thing, but in reality they are looking for a deal which has little-to-know risk on their part while guaranteeing flexibility and revenue at the cost of the City of Sacramento and it's partners.

I'm not certain if any other conclusion can be had, but I'd be curious if someone is seeing this differently. Also, if someone familiar with the Premium Parking and AEG's obligation could clarify that point, I'd appreciate it.
Click to expand...

Thank you for taking the time to do this. It's nice to be able to have one spot where the true lunacy of the Maloofs is exposed for what it is.
 
Larry David said:
If you want more double speak, Grant is saying the city should just move the deal out to Natomas. The city should use the money from increased parking money associated with a DOWNTOWN ARENA and spend those dollars on a new Natomas arena that won't impact downtown parking. That makes sense.
Click to expand...


I have defended Grant a lot in the past as I thought he did nice job with his show up until now. He has completely lost me. I wonder if anyone is with him at this point outside of the Maloof family.
 
kupman said:
I have defended Grant a lot in the past as I thought he did nice job with his show up until now. He has completely lost me. I wonder if anyone is with him at this point outside of the Maloof family.
Click to expand...

Since I can't listen to Grant, has anyone pointed out the building moratorium now in effect in Natomas and the simple fact that they couldn't build a outdoor bandstand let alone an arena?
 
Uncia03 said:
Term 2.5 is probably the worst of all the terms. Term 2.5 basically says that if the Maloofs sell the team, the new owner is not obiligated to the Term Sheet. Why in the world would you put that in there unless you not only had plans on selling, but had discussions with potential buyers, and you gave assurances that they would not have to be 'stuck in Sacramento'.
Click to expand...

I think that's an interesting point that hasn't been overdiscussed just yet. While on the one hand it could be a request that the Maloofs knew would be rejected so they could pull out of their "good-faith" negotiations with the city, the other possibility is that they have a deal already sketched out to sell the team (if so, almost certainly to Samueli). But the NBA approves ownership changes, and the NBA has seemed to be pretty cool on Samueli as an owner. Imagine after all this that the Maloofs come to the NBA and say: we have a buyer and an agreed price. Can the NBA say, "Oh, you're selling? Burkle has offered the same amount and will keep the team in Sac. Great! It's a deal!"?
 
We talked to Angelique Ashby last week on the Natomas moratorium. The levee work has still not got the funding but she is hopeful. It's all a moot point anyway as the city cannot fund a new arena in Natomas even if they tried.
 
kupman said:
I have defended Grant a lot in the past as I thought he did nice job with his show up until now. He has completely lost me. I wonder if anyone is with him at this point outside of the Maloof family.
Click to expand...

Grant just wants keep both of his jobs.

He wants the fans to calm down and keep coming to games. He thinks he can pressure the city and Maloofs to come back to the table and hammer out a deal.

In order for those two things to occur, he will say anything. He's also trying really had to back the Maloofs without backing the Maloofs.

Making sense or using logic aren't very high on his list.
 
Larry David said:
That's a great breakdown. You can't say you are protecting the city and make demands that will destroy the city. It's the same as last year. The league told them to wait a year, so they waited a year. The league almost got them to take a deal here. Now, they are done. They've killed the deal and they are leaving town ASAP.

They want to:
1. To move the team to Anaheim and take the loan from the Ducks owner
2. Take that money to cover a small relocation fee and use the remaining funds money buy back some of the Palms, they have the option to do that for a period of time.
3. Make lots of money on the Anaheim Royals and Palms.
4. Pay off the loan to the Ducks owner
5. Have it be like the good old days.

After the roar dies down and things get uncomfortable enough for the NBA, they will move the team to Anaheim with a lawsuit if needed. The legal fight and/ or relocation fee will be so significant that Georgie isn’t buying back any Palms shares. The Ducks owners will get the team. The Maloofs won’t have the Kings or Palms, but will live very comfortably by selling off chunks of the Wells Fargo stock. Sacramento gets screwed out of a team by bad owners.
Click to expand...

This pretty much sums it up.
 
JB_kings said:
Well the boys always seem to have people lining up to loan them money. You know because they are so good with being developers and stuff...

I suggest George have a chat with Leonard Padilla. He has a billionaire friend that keeps arena money as pocket change and he would just give them that money. Then they can have milk and lay down for story time.
Click to expand...

I guess owning a casino has incredible benefits. Georgie is most certainly connected to power executive- banker types. I can picture drop dead gorgeous associates accommodating the V.I.P.s compliments of George Maloof and The Palms Hotel and Casino for a low interest loan. That's how it works in Las Vegas.
 
jpsls said:
Napear looking for a raise?
Click to expand...

Napear makes me sick! He's a paid mouthpiece for the Maloofs. It wouldn't be so bad if he just STFU. But he contradicts things he has said in the past to stick his nose right up the Maloofs ***. He was complaining about high ticket prices in a new arena the other day. What crock! Like he cared before. Of cource prices will go up. As soon as the Kings are better prices will go up. As soon as the economy is better prices will go up. He talked about Niners ticket prices in a new arena. Like they should stay in candlestick for another 50 years?!?!

You know what else will go up? The cost of labor and contractors to build an arena. Now is the time! People say the economy is bad so you shouldn't take any chances. This is the perfect time. That is why Stockton failed because they built during the bubble and based projections on the bubble.

I have no respect for Grant Napear!
 
ArcoKings said:
I guess owning a casino has incredible benefits. Georgie is most certainly connected to power executive- banker types. I can picture drop dead gorgeous associates accommodating the V.I.P.s compliments of George Maloof and The Palms Hotel and Casino for a low interest loan. That's how it works in Las Vegas.
Click to expand...

The Maloofs are pretty much yesterday's news in Vegas, since they now own a mere 2% of the Palms. From what I've heard from people in a position to know, the Maloof reputation is at an all-time low in Sin City.
 
If the Maloofs do just want out of Sacramento, I see no reason why they won't be able to. I don't see a way for a government entity to force a private business to stay where they don't want to. The only avenue is for the NBA to step up and say that the franchise should be in Sacramento. Stern seems to be done with this though.
 
I think they clearly want to be in Anaheim. They tried to relocate to Anaheim but weren't allowed, and were forced to deal with Sacramento's efforts for an arena deal for a year which they set out to torpedo, because they want to be in Anaheim. Now they are forced to settle back in Sacramento for a bit because the league and its owners will not grant them relocation because of the city's efforts and not wanting to crowd the greater LA market. Problem is, I believe they might have the leverage with a deteriorating building and possible fanbase backlash to ask for relocation in 2-4 years.. hopefully something happens to stop these bafoons in place.
 
rhythmless said:
If the Maloofs do just want out of Sacramento, I see no reason why they won't be able to. I don't see a way for a government entity to force a private business to stay where they don't want to. The only avenue is for the NBA to step up and say that the franchise should be in Sacramento. Stern seems to be done with this though.
Click to expand...

You can expect Steinberg to push a bill in the state senate that would require sports franchises to make cities whole before being allowed to move within the state.
 
rhythmless said:
If the Maloofs do just want out of Sacramento, I see no reason why they won't be able to. I don't see a way for a government entity to force a private business to stay where they don't want to. The only avenue is for the NBA to step up and say that the franchise should be in Sacramento. Stern seems to be done with this though.
Click to expand...

Couldn't be further from the truth, in my opinion.

Stern's got his paws and name all over this deal. No way in heck he lets the Maloofs run him over.
 
The Hammer said:
Couldn't be further from the truth, in my opinion.

Stern's got his paws and name all over this deal. No way in heck he lets the Maloofs run him over.
Click to expand...
Got to agree with this sentiment. The NBA negotiator said all those issues had been discussed over the last year and supposedly were settled by the time the term sheet was drawn up, supposedly. The Maloofs clearly have no problem being dishonest. At this point, I don't think I'd invest in a box of Cracker Jacks with them.
 
kennadog said:
Got to agree with this sentiment. The NBA negotiator said all those issues had been discussed over the last year and supposedly were settled by the time the term sheet was drawn up, supposedly. The Maloofs clearly have no problem being dishonest. At this point, I don't think I'd invest in a box of Cracker Jacks with them.
Click to expand...

George would want the submarine and would just watch it sink.
 
The title of this forum makes me think of those monster movies, "What does (insert monster name here) want?" Something like this, I envision:
 
You must log in or register to reply here.
Back
Top