Sacramento Kings-Titanic?

It seems Mayor Johnson and some city leaders are willing to do nearly anything to keep the Kings in Sacramento.  The question is should they succeed, are they booking tickets to the Titanic?

Common Sense is not common…..   Sometimes our desires overwhelm logic and common sense.    Several sports columns are looking into the Maloof finances…    The Sacramento Bee’s Marcos Breton column 3/27/2011 said the the move to Anaheim looked more like a bailout than relocation.

Before Anaheim, there were many questions here in Sacramento that caused a bit of head scratching.

It’s clear the City wants a new arena downtown. Why would the Maloofs who are  the current land owners want to become tenants?

Many of the issues with Arco had to do with maintenance from the leaky roof to replacing the floor for Ice Shows.

Last year, the Maloofs  said they would pay 300 million dollars over 30 years towards a New Arena at Cal Expo.      A new arena could be built for 300 to 400 million dollars next to Arco.

After years of saying Arco was to old and they needed a new arena to remain competitive, the family refused to cooperate with the city and turn over financials to the city.

Marcos Breton ( Maloof’s Deal Looks Desperate-Sacramento Bee 03/27/2011)

Previously, the Maloofs demanded control of any and all revenue streams related to a new arena in Sacramento if they were to keep the Kings  here.

But the proposed Anaheim deal is full of significant concessions to their prospective landlord, billionaire Henry Samueli.

Chief among them: The Maloofs would control only 50 percent of parking revenue and only 50 percent of food and beverage revenue generated for NBA games.

The Maloofs would not control the Honda Center naming rights. Should Sameuli extend his naming rights deal with Honda or makes another deal, Samueli alone sets the terms.

Under any new naming rights deal, the Maloofs would be entitled to only a third of the money.

The Maloofs would get 100 percent of  NBA-related advertising inside Honda Center.  But they would get only a third of every other form of arena advertising.

They would get 92 percent of  ticket sales from NBA games but share in no revenue from NHL games, concerts or any other events at Honda Center.

Samuel also controls the arena’s luxury suites.

So, the Maloofs will go from wanting to control everything in  Sacramento to virtually being tenants if the venue contract details released by  Anaheim officials Friday are any indication.

Of course, the deal remains unsigned and much could change between now and April 18, the deadline for the Maloofs to make a relocation bid before the NBA Board of Governors.

But there are two details in the proposed  Anaheim deal that provide the most clarity yet on what’s driving the move: First, there is a $50 million loan from  Samueli  to the Maloofs.

The terms of the loan have not been revealed, but it’s a safe bet that security for it will be severe. Some of the loan language is spelled out in capital letters for emphasis:


The Kings  already have borrowed significantly from the NBA. And though they deny it, media reports have stated the Maloofs could lose a controlling interest of their Las Vegas casino to lenders. When they bought the Kings, the Maloofs also inherited a loan from the city of Sacramento in excess of $70 million with prepayment penalties.

Now Samueli is proposing to float them another massive loan.

Meanwhile, there is a vague section of the deal where the Maloofs would own all rights and revenue to whatever TV deal they could secure in  Anaheim.

It seems this is where the Maloofs could potentially make money and make the move work.

The Los Angeles Lakers  recently signed a 20-year deal with  Time Warner Cable valued by some at $3 billion, though Time Warner officials dismissed that figure in published reports.

Could the Kings score their own lucrative deal? It’s anybody’s guess.

On Tuesday, Anaheim officials will vote on whether to pass a bond sale for $75 million. Presumably, $50 million of that will be siphoned off to the Kings and the remainder would be used to upgrade the Honda Center.

The fact that the Maloofs would move from a sports market they control to one where they are tenants is telling. It gives the impression that they are desperate.

The $50 million loan from Samueli raises all manner of questions on how the Maloofs will repay their loan to Sacramento and what will become of Power Balance Pavilion if they move.

If they pay off the loan, the Maloofs retain control of the Natomas arena and 80 acres around it. If they don’t, the city of Sacramento retains the arena, land and a $25 million stake in the team.

If that happens, how in the heck would a city that is broke repay the Kings loan to bond investors who surely would want their $77 million? It’s also clear that all the well-meaning emotion to keep the Kings here is heart-warming, but largely insignificant in this cold-blooded deal.

It’s not about emotion or anything Sacramento did wrong. There is one major difference between Anaheim and Sacramento and only one difference that matters: Henry Samueli.

He is the straw that stirs this drink. He has the money the Maloofs don’t have. He has the clout with Anaheim that no rich Sacramento guy has here. He has deep pockets; Sacramento is broke.

If the Maloofs had made these kinds of revenue concessions in 2006 or before, there would probably be a new arena sprouting in Sacramento right now.

But they wanted to control all revenue streams in Sacramento and walked away from the table when they couldn’t. Now they appear desperate enough to give up most of the control to remain viable.

It’s one of many bitter pills Sacramento may swallow as this nightmare of a deal moves forward.

Anaheim Royals,  Teetering on the Edge

The move to Anaheim is beginning to sound like a short sale where they will retain limited ownership.     Based on the information, the move is beginning to sound like a desperate move,  there are many subplots.

Can the LA market support three teams?

Will the Clippers and Lakers agree to share the market or will they lobby the other teams to reject the move?

Will Orange County citizens and businesses  support a perennial   last place team ?

Finally, with the move the Maloof’s will have  an enormous debt and that debt will have an impact on the teams payroll and the talent.

Smoke and Mirrors

Arco/Power Balance Pavilion, is an old building,(for the NBA)  But its not  the central problem.  For more than 20 years the Sacramento has supported a mostly mediocre team. Game after game fans filled(318 consecutive sellouts) over 17 thousand seats.   The fans bonded with the players, some who live and were involved with the community.

Today, there isn’t a Webber,Divac, Bibby,Jackson, Christie or Stojakovic, there is no connection with the team. (Can you name three players?) and after 20 years just having a team in Sacramento isn’t enough, the fans wants a  champion.

For years the organisation struggled to sell corporate boxes.

Corporations supports winners… Southwest and other key sponsors pulled away.

There was a time when the Maloof’s where the toast of Sacramento. The Kings was the team players wanted to play for.  It was small market Sacramento,where the brothers became nationally known.

Perhaps ego, perhaps it was the notoriety. Greed followed, the Citizens would pay for the majority of the  new Arena, the Maloof’s receive all the revenue, addition they demanded a share of revenue  from businesses , near the Arena.

See: Sacramento Kings a look back to 2006


Greed, damaged their relationship with the fans and the community at large.

Greed, wasn’t limited to the Maloof’s   A narrow focused ,Inept local leadership and overzealous boosters also damaged the Arena plans.   Beginning with city and country officials flying to Las Vegas to meet with the Maloof’s at the Palms.    Leaders insisting the new Arena be built downtown in the undeveloped Railyards, the cost downtown was considerably higher than an new Arena on the 80 acres at Arco. with estimates between 500 to 700 million dollars.

Leaders-Boosters continue to misread Sacramentians. A half billion dollars(2006) for a city the size of Sacramento with few large corporate sponsors  was a tall order.     No Serious studies or proposals to remodel or expand Arco was ever contemplated.   A new arena next to Arco didn’t have stand a chance  It was the Railyards

By all accounts, Mayor Kevin Johnson,had made the new arena and the Kings priority one.  He overstated, the defects of Arco, without specifics.    After the NCAA announced Arco wouldn’t chosen this year, the  high profile Mayor told the world Arco was shabby.  Shabby went national and probably effected bookings for the Arena, that statement along with the endless task teams may have done more damage than helped.   It clearly frustrated the Maloof’s and annoyed some neighborhood associations..

The problem is. people who attend concerts and other venues, didn’t see the problems he sighted.   With or without the Kings, there are hundred of thousands who appreciate the quality of acts at the arena.  Before the Arena, if a Sacramentian wanted to see Tina Turner, The Eagles or Lady Gaga, they had to drive to the Bay Area or Los Angeles.

Sacramento Kings-Battling for a sinking ship?

The Maloofs and Sacramento are suffering as a result of the economy. Real Estate values have fallen.   Sacramento and Las Vegas are two of the  hardest hit areas in nation.   The gaming in Nevada is struggling,  Indian Casinos in California has reduced traffic between the two states  Casinos are closing in Nevada others are struggling , the famed Sahara will close in May.

The Maloofs largest holdings is  the Palms Casino and the Kings.   The family is struggling to keep control of the Palms.

Last January, Forbes Magazine (The Business of Basketball) said 17 NBA teams of 30 are losing money.    The NBA bought the failed New Orleans Hornets, there aren’t enough bandages to stop the bleeding..  According to Forbes, the Kings lost nearly 10 million dollars last year.

With both of  the Maloof’s largest holdings losing money, its just a matter of time.