hates pounding the rock!
Join Date: Dec 2010
Location: Southern Alberta
Maloof family agrees to sell Kings for record $535 million
Thank goodness that's over, unless the arena deal falls through for Sacramento. I can see PJ there.....
Responding to the wishes of NBA Commissioner David Stern, the Maloof family completed the sale of the Sacramento Kings to a local group led by software magnate Vivek Ranadive, on a franchise valuation of $535 million, which will be a league record, a league source confirmed late Thursday. That group will keep the team in Sacramento and work toward construction of a long-awaiting arena in the city's downtown area.
Ranadive agreed to a valuation that was $10 million higher than the initial valuation of the Kings by Seattle hedge fund manager Chris Hansen, who reached a deal with the Maloofs in January for 65 percent of the team on a valuation of $525 million. But Hansen's request to move the Kings to Seattle was rejected by the NBA's Board of Governors in a 22-8 vote Wednesday in Dallas, following a 7-0 vote of the league's relocation committee April 29 that also rejected the proposed move.
If Ranadive buys 65 percent of the Kings under the purchase price with the Maloofs, he would pay them $347.75 million.
Ranadive said Wednesday in Dallas that his group had put $341 million -- the original 65 percent share of the team under the $525 million valuation -- into escrow, a key requirement for the Maloofs to agree to a sale.
Stern had worked with the Sacramento group for the past several weeks to make sure the Kings' offer could pass muster with NBA owners. Stern said after the Board of Governors' vote Wednesday that he wanted to finalize the sale of the team to the Ranadive group within 48 hours.
The Kings' new owners -- Ranadive, who will be the first majority NBA owner of Indian descent, the Jacobs family, which runs the communications giant Qualcomm, swimwear magnate Raj Bhathal, who was introduced Wednesday as taking on a bigger role in the group, 24-Hour Fitness Founder Mark Mastrov and former Facebook executive Chris Kelly -- represent a cross-section of California investors who came together in the last three months to save the team.
Johnson was able to bring significant credibility and dollars to the group with Ranadive, a minority owner of the Warriors, and the Jacobs brothers, who were well-respected not only regionally in California because of their business and philanthropic work, but even by the competing Seattle group.
George Maloof said Wednesday he still hoped to keep Hansen involved as a minority owner, but that was not going to be acceptable to owners, given Hansen's stated desire to move the Kings to Sacramento.
Now, the Sacramento group and Mayor Kevin Johnson will have to come through on the commitments they made to keep the Kings in town. They will have to get the proposed $447 million arena, with $258 million in public funds committed, built in a timely manner and without large budget overruns. They will have to avoid potential delays such as a public referendum that local attorneys are trying to get on the fall ballot.
If they can, Johnson and Ranadive believe that the new arena and subsequent development in the downtown area of the city will be transformative, bringing jobs and additional capital to California's capital city.
The sale ends the Maloofs' stewardship of the team, which started with great promise after the family became the franchise's majority owners in 1999. The team became one of the most exciting in the league, with Chris Webber, Vlade Divac, Jason Williams (and, later, Mike Bibby) leading one of the best passing teams in recent memory to the Western Conference finals, where they lost a controversial seven-game series to the Lakers in 2002.
But after Webber tore his ACL in the 2003 playoffs, the fortunes of the team dipped dramatically. And as the need for a new building to replace Sleep Train Arena became more acute, the Maloofs and the city could not reach agreement over more than a decade and several arena plans.
In 2011, the Maloofs made plans to sell the team to an Anaheim group that would move the Kings there. But concerns about the building in which the team would play created enough doubt to scotch that proposal before it was put to a vote of the full Board.
With the league's substantial input last year, the city and the Maloofs reached agreement on a $391 million arena that was announced at All-Star Weekend in Orlando. But the Maloofs walked away from the deal, leading to acrimony between the owners and Johnson.
But as a deal got closer in the last few weeks, Johnson's rhetoric toward the family became much softer. Wednesday, he said he knew the family was emotionally torn about getting out of the NBA business, after their turn in Sacramento and their late father's ownership of the Rockets in the early '80s.
Sources maintained for months that the Maloofs did not want to sell to a Sacramento-based group, preferring to do the deal with Hansen, with whom the Maloofs had worked for months. George Maloof seemed to back off on that a little Wednesday, saying he liked Ranadive and that their lawyers had been speaking with each other for weeks in case the Hansen deal was rejected.
"If it had to turn out this way, it's fine with us," George Maloof said Wednesday. "But my loyalty's with Chris, because he stepped up. We tried to find somebody that would buy the team in Sacramento. And we couldn't. That's the fact of the matter...the Mayor did a great job, put a great team together."
The Hansen group, backed by billions between Hansen and Ballmer and Nordstrom Store executive Peter Nordstrom, was an exceptionally strong group with solid financing, and which had already acquired the land on which it wanted to build a $490 million area in Seattle's South of Downtown (SoDo) section.
It had agreement from Seattle's City Council to provide up to $200 million in public financing (which was contingent both on getting the Kings, and a potential NHL team). And it had an agreement with the owners of the team.
But Sacramento was able to do in months what it had taken Seattle two years to put together.
The city's initial major investors were 24-Hour Fitness founder Mark Mastrov and supermarket magnate Ron Burkle, along with 25 other local investors who each pledged $1 million in corporate contributions. But the group soon morphed into a new one. Burkle got out of the team and arena deals after a potential conflict of interest was unearthed during the vetting process.
Johnson and his political allies were able to quickly get a term sheet approved that would provide $258 million in public money toward construction of a new building to replace rapidly aging Sleep Train Arena, on the site of a mall that was eyed for redevelopment by several out of town investors, who had been involved in other major development projects in California.
After it became apparent the Sacramento group would be able to match the initial $525 million valuation, the Hansen group upped the ante, raising its valuation to $550 million, then $625 million, meaning it would pay $406.25 million for the 65 percent share of the team it originally bought. In addition, Hansen's group announced it would offer an unprecedented $115 million in relocation fees to NBA owners if they approved the sale -- approximately $4 million per team.
Stern and deputy commissioner Adam Silver went out of their way to praise the strength of the Seattle presentation, promising "fair dealing and thorough consideration down the road" for that city -- though Stern said flatly that the league had nothing it could offer Seattle at the moment in terms of a promise or commitment to bringing a team there in the future.
He reiterated that the league could potentially look at expansion as a solution but that such discussions would only take place after the league completes its next television agreements with broadcast and cable networks.
Silver said the league "regretted" leaving Seattle, and hoped that it would return to that city soon.