How Relocation Math Could Save The Sacramento Kings

March 7, 2012; Sacramento, CA, USA; Sacramento Kings fan holds up a sign to acknowledge the recent vote to build a new arena and keep the team in Sacramento before the game against the New Orleans Hornets at Power Balance Pavilion. Mandatory Credit: Kelley L Cox-US PRESSWIRE

Seattle's Chris Hansen is expected to make a huge offer to buy the Kings at some point. But certain relocation costs will make a Sacramento-based purchase of the club a lot cheaper, if the Maloofs decide to sell.

On Monday, Chris Hansen and the city of Seattle reached a revised deal on plans for a new arena in the Emerald City that includes some public funding but requires that Hansen acquire an NBA team before ground is broken. The council has enough committed votes, reportedly, to get the final approvals done. But Aaron Bruski of Pro Basketball Talk -- one of the writers covering the Sacramento Kings' fate most thoroughly -- points out that things could begin to get really expensive for Hansen if the Kings are Seattle's target.

In addition to the $300 million Hansen is expected to shell out at minimum for the arena, he'd need to pay at least $400 million outright to make it worth the Maloof family's trouble to sell. In addition to that, should the Kings leave Sacramento, a city loan worth $70 million comes due immediately, and the league will impose a relocation fee of anywhere between $30 million to $100 million, depending on the target. (The high end was projected when the Maloofs were cooking up a deal to move to Anaheim, which is near two NBA teams who really don't want another neighbor. Those issues don't exist in Seattle, so it'd be unlikely you'd see an outrageous relocation fee. It's worth noting that Clay Bennett paid a $30 million relocation fee to move the Sonics to Oklahoma City. Charging Seattle more than that might be seen as a slap in the face.)

Assuming a $30 million relocation fee, that means, as Bruski notes, Hansen would be paying $500 million to get a Seattle-based team ... and then he'd be paying for most of the arena. There's little doubt an NBA team in Seattle will be lucrative. But that's a lot of coin to get into the league.

Here's where it gets really interesting: the price for a Sacramento-based offer can be all of that $400 million and yet be much cheaper.

A bidder who plans to keep the team in Sacramento won't have to worry about the $70 million loan due to the city -- it'll be rolled into the deal for the new arena already in place. (You know, the one that George Maloof torched in April.) The relocation fee need not apply, as well.

So if, say, Ron Burkle (a billionaire who has publicly stated an interest in buying the Kings and keeping them in Sacramento, and whose business partner was integral in the downtown arena plan formulation) offers $400 million to buy the team, it's going to cost Hansen $500 million to play ball. If Burkle or someone else offers $420 million, it'll cost Hansen at least $520 million to keep up.

And remember the arena math, too: Hansen is coughing up at least $300 million. It may end up being quite a bit more than that. The Sacramento arena plan calls for $70 million from the team owners. That deal was crafted for the broke Maloofs -- a revised deal could ask for closer to $100 million, but the league has shown a willingness to help out. (The NBA had committed to giving the Maloofs $7 million to take the deal and to provide the loan for the other $63 million.)

At the most conservative estimate, Hansen will be paying a total of $300 million more than a Sacramento-based bidder to have a basketball team in his chosen city.

That doesn't mean Sacramento has any sort of real advantage or even hope. Burkle has no direct ties to Sacramento. He didn't in Pittsburgh when he helped save the Penguins, either, but he didn't have to pay out of the nose to get that deal done. The likelihood of Burkle getting into a bidding war to save the Sacramento Kings seems low. There are other potential investors, and Burkle would certainly have help from other parties interested in keeping the Kings in Sacramento. But it's not a cash issue. It's a value issue. The Kings might not be worth $400 million in Sacramento, whereas they are probably worth $400 million or more in Seattle.

But the relocation math is, for a change, something Sacramento can lean on. The thought is -- and Bruski agrees -- that Seattle's resolution will now speed up the clock a bit and put the Maloofs on a spot. The Maloofs' position might not get higher than this, and the last thing the family needs is for Hansen to turn his attention to the Milwaukee Bucks. The Maloofs are interested in selling, a bidding war between Seattle and Sacramento is like manna from heaven.

As with all things Sacramento and Seattle, stay tuned.

***

The Hook is a daily NBA column by Tom Ziller. See the archives.

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