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Thursday, May 23, 2013
NBA Commissioner: 'Nothing more to be done' to save arena deal
by Melissa Corker, published on April 13, 2012 at 1:55 PM
Storyline: Politics
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After a year of negotiations, economic reports and financial cartwheels by city officials and Sacramento Kings owners, NBA Commissioner David Stern said it appears the deal for a new Sacramento arena is dead.
“I am extremely disappointed on behalf of both the Maloofs and the city of Sacramento,” Stern said at a New York press conference Friday, “but I think there is nothing further to be done.”
Stern said the NBA Board of Governors met Thursday with the Sacramento Kings team owners, the Maloofs, and – after hearing a “detailed and thorough” presentation – Stern said the board came to some simple conclusions.
“(In Orlando) we had an agreement in principle – a framework, a handshake deal you could call it,” he said. “In my view it was always subject to any party saying they didn’t want to do it. It was always non-binding.”
At an earlier press conference Friday, George Maloof, attorney David McNeil and economist-for-hire Chris Thornberg outlined the reasons the Maloofs were no longer interested in the handshake deal that took place Orlando.
The concerns included issues with profit-sharing, naming rights and signage, approval rights on contract agreements and pre-development costs.
“The terms under which we would be required to make financial commitments were wholly unworkable,” George Maloof said.
Stern said he felt the area deal failed because the Maloofs re-examined certain assumptions underpinning the deal and – upon closer review – they grew increasingly uncomfortable with it.
“They recognized that (since) it was necessary to bring in a third party, AEG, because we needed their funds to finance the deal – together with their existing debt load – it would further burden the team,” Stern said. “They ultimately decided this isn’t a transaction they want to go through with.”
Stern said that it would have saved everyone a lot of angst if the Maloofs had said they wanted out of the deal “sooner and simpler.”
George Maloof suggested at the earlier press conference that a better idea than building a new arena might be to revamp the existing Power Balance Pavillion, where the Kings currently play.
“If they choose to do that, that’s up to them,” Stern said.
Stern told media that, in Orlando, the NBA agreed to advance $63 million to the Maloofs to help finance their portion of the deal – and that the NBA would make an additional $7 million contribution to the Maloofs for other costs associated with the arena deal.
“I don’t think we have anything further to give, to cajole, to yell at or to do any of the various things I tried to get the parties on track to a workable deal,” Stern said.
Stern commended the city of Sacramento, the fans and Mayor Kevin Johnson for the effort to make a new arena deal work.
“We asked the city of Sacramento to step up and they did so in an extraordinary way,” Stern said. “They couldn’t have done so in a finer fashion.”
Johnson was in New York Friday to meet with the Maloofs to discuss the arena deal, however Stern said he was “hopeful but not optimistic” about the potential outcome of that meeting.
Melissa Corker is a staff reporter for The Sacramento Press. Follow her on Twitter @MelissaCorker.
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I really hope their empire crashes and burns, because they're doing everything in their power to make that happen.
I think the Maloofs expected something like a car deal term sheet. This is how much you're going to pay per year, per month for this long. And this is the model you're getting and if you want extras, this is what it's going to cost you. The Maloofs then wanted a straight-up contract where all the terms were set down straight away. Or at least all the terms that applied to the Maloofs.
I am not sure how you go about reconciling those world-views. I mean--you could reconcile two of them... but all three at the same time and in one set of contracts? That is challenging.
The City, I think, was expecting a multi-level contract with guarantees (of different sorts) from different parties and, furthermore, a contract that was politically acceptable. For the City then, the most important thing is political acceptability.
And Stern/NBA probably was comfortable with an incremental contract whereby the different parties came together at different points to give something more. The reason being that for the NBA the most important thing is to make sure that having and keeping a basketball franchise is seen as highly desirable.
Sacramento Current say something different but they approach it from a different angle. They point out that a deal like this is never "just business". There's a lot of emotion mixed in there as well. The home team, where you're going to take your kids, date night--all of it. So it becomes more than just a set of contracts, making reconciling all of it that much harder.
The city government, local development community, and a lot of Kings fans, were willing to ignore the fact that the Maloofs clearly wanted to move the Kings and had no real interest in committing to a 30 year deal in Sacramento. When the Kings made half-hearted statements about wanting to stay in Sacramento, I knew they were lying--but apparently the Mayor and the Metro Chamber believed them.
And I am sure that Maloofs want to move but two questions: 1) Can they afford it? and 2) Will any city want to do business with them?
Our town has a couple things going for it and a couple things against it. We don't have billionaires knocking around and we don't have as many headquarters of large corporations. We do have a relatively large media market and no competition. There just isn't another pro sports team or even a college team that plays in a major conference.