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The Hook teaches you all about the Sacramento Kings, a team we would forgive you for not thinking twice about since 2003.
The Sacramento Kings are in the news! It is not good news. They are, in fact, on their deathbed. A deal has been reached (and acknowledged) to sell the team to a group of very rich men who want to move the team to Seattle at the end of the this season. Sacramento maintains hope that fate can be reversed.
It is totally understandable that you would not know everything that you want to know about the Sacramento Kings. The Hook is expert on very, very few things. The Sacramento Kings are one of those few things. So, as a public service: everything you might actually need or want to know about the Sacramento Kings.
Why are the Kings moving?
Because the Maloof family is selling the team to Chris Hansen and Steve Ballmer, who have been working in recent years to get basketball back in Seattle.
Why didn't someone from Sacramento buy the team?
Because there has been no opportunity to do so. The Maloofs have steadfastly maintained that the team is not for sale for as long as they've been in town (1998). In fact, they get visibly angry whenever someone asks them about selling the team. Ron Burkle, a billionaire grocery magnate and Friend Of Bill Clinton, released a statement in April 2011 indicating that he was willing and ready to buy the team and keep it in Sacramento. The Maloofs were so incensed by the suggestion that they now spit whenever his name is mentioned in their presence, like with Catholics and the Devil or Manti Te'o.
Why are the Maloofs selling the team?
They are broke. They went hundreds of millions of dollars into debt on George Maloof's failed condo tower project at The Palms in Vegas, and ended up losing the casino/resort to debtors. (The Maloofs now own 2 percent of The Palms.) Much of the family's wealth is tied up in illiquid Wells Fargo stock; obviously, that stuff tanked hard in 2008, which is when the Kings hit rock bottom. To try to save themselves, the family sold off the meat-and-potatoes business: a dominant alcohol distributorship in New Mexico. It wasn't enough to save The Palms or, apparently, the Kings. The sentiment is that the Maloofs will take the Seattle cash-out to invest in their next great business. They do have an option to buy up to 18 percent of The Palms to become 20 percent owners.
Why wouldn't the Maloofs sell the team before now, like in 2009?
The Maloofs owned a team -- the Rockets -- in the late 1970s and early 1980s. They even went to the NBA Finals. The patriarch of the family, George Sr., was the main man at the time. Joe and Gavin were in their mid-20s and involved in running the team. But George Sr. died of a heart attack, and his sisters convinced and/or forced the family to sell off the Rockets for like $11 million. The Rockets are now worth something like $400 million. The Maloofs believe strongly in the wealth-creating potential of pro sports teams. So they have been reluctant to sell. (They also like to be on TV. Adrienne Maloof is a star of Real Housewives of Beverly Hills. Joe and Gavin are stars of this still-amazing commercial.)
If the Maloofs have now decided to sell, why didn't they let a Sacramento group bid? Wouldn't that potentially drive up the price?
This is the question we're all asking ourselves. There is some legitimate bad blood between George Maloof and Sacramento mayor Kevin Johnson; they basically called each other liars last April. (Only one of them backed out of a handshake deal, though.) There have also been reports that Chris Hansen, the Seattle guy, agreed to front the Maloofs $30 million by the end of the month to preclude them from looking at other bids and get them to sign the deal and submit it to the league, which they did on Monday. Finally, a $525 million valuation? Trying to drive that bid up is like looking a gift horse in the mouth.
So it's done, right?
No. Kevin Johnson will be given an opportunity to make Sacramento's case at the April Board of Governors meeting. He hopes to convince the NBA owners to allow Sacramento bidders to match Hansen's purchase agreement. It's unclear exactly how the Board could force such a sale. But KJ is currently forming the right investor group and strategy. Odds are that the sale and move will happen. But you can go ahead and be the one to doubt KJ.
Why is there so much trust in KJ?
In 2011, David Stern announced during All-Star Weekend that the Maloofs were discussing a deal to relocate the Kings to Anaheim. In fact, a deal was all but done: the Anaheim City Council even approved financing for facility improvements to the Honda Center (where the NHL Ducks play) and a lease agreement was okayed by the city. But KJ made Sacramento's case for another chance to the Board of Governors, and after some big wins in the court of public opinion by an activated, excited Sacramento community, the Maloofs backed away from their plan. Many surmise that Stern told the Maloofs to pull back or he'd make life very difficult on them. KJ then followed through with his promise to put together a viable Sacramento arena plan within 10 months. Stern himself was involved in negotiating the deal. The Maloofs, Stern and KJ all announced the framework of a deal the day after the 2012 All-Star Game. KJ was welcomed back to Sacramento as a hero.
What happened to that deal?
The Maloofs pulled out six weeks after the framework was reached. George Maloof, who I remind you lost the family's fortune on a bad development deal just a few years ago, released a list of 16 points of dispute in the deal. Among them were a onerous 30-year lease (the Maloofs wanted to be able to relocate before the arena was paid off), a collateral requirement for an existing $70 million loan with the city (the Maloofs didn't think it was appropriate to have a guarantee on a loan of that size) and sundry items that basically no other NBA team receiving an arena with a large public subsidy has ever quibbled about. In an infamous press conference with Sacramento media outside of the Board of Governors meeting in April 2012, George lit the deal on fire. He had an economist who had not been involved in the negotiations at any level to that point explain why it was likely that the deal, which Maloof argued was not generous enough to the Maloofs, would drive the city into squalor and bankruptcy. Stern was extraordinarily annoyed in his public reaction later that day, and KJ was ... not nice. And everyone understood why.
Did the Maloofs have a point?
Stern was involved in negotiations. He works for the owners. Trust us: he wouldn't push one of his owners to take a terrible deal. It'd set a horrible precedent. Also, the fact that other potential owners are lining up to take Sacramento's arena deal says something.
Why should the NBA care whether Sacramento has a team? Attendance is horrible ...
The Sacramento Kings have sold out 19 of 28 seasons in Sacramento. That's right: in 19 of the 28 seasons the Kings have been in Sacramento, every last home game has been completely sold out. That includes a span for the first opening night in 1985 through the 1996-97 season. The Kings' record over that span: 359-625 (.365), with all of two playoff berths and a high-water mark of 39-43. And every single home game -- all 492 of them -- was sold out.
But attendance is horrible now.
The regular sell-outs ended around 2007 as the team stopped competing at the highest levels but ticket prices remained sky-high, as they'd been when the C-Webb era Kings were battling for championships. Relocation rumors also began in earnest in 2006, as a ballot measure openly tanked by the Maloofs failed miserably. The Maloofs have been widely disliked ever since, and it wasn't until 2009 that the team rejiggered its sales staff, dropped tickets prices and actually tried bringing new partners into the fold. (KJ famously raised $10 million in new 2011-12 sponsorships for the team. These were sponsorships that the Maloofs couldn't land themselves. Great businessmen, yeah?)
You'll understand why attendance is low this season after what the Maloofs did last April. For what it's worth, more than $18 million in season tickets has been pledged for an NBA team under new ownership in Sacramento.
Sacramento is so much smaller than Seattle, though.
There's no question that Seattle is an excellent NBA market. But that was an argument to make back when the NBA approved leaving Seattle for Oklahoma City (the No. 42 media market in the nation). Sacramento is the No. 20 market, and has no other pro sports teams or major college athletic programs. The second biggest team in Sacramento is the Sacramento River Cats, a Triple-A affiliate of the Oakland A's. (The River Cats, by the way, have been No. 1 among all minor league teams in attendance since moving to Sacramento in 2000. Sacramento is a good sports town.)
If Sacramento does lose the Kings, what's next?
The city will likely pursue building an arena downtown to a) give the city a legitimate major entertainment venue and b) persuade the NBA to send a team Sacramento's way. There could be a push during KJ's plea for expansion to Sacramento within the next couple of years. As noted last week, there are no good arguments against expansion. In addition to that, Sacramento may push for a Major League Soccer team.
How can the Board of Governors prevent Sacramento from getting screwed without screwing Seattle?
They can allow Sacramento investors to match Hansen's offer for the Kings and immediate grant Hansen an expansion team in Seattle for the 2014-15 season. (Want a fair price? Hansen's group is paying the Maloofs' $341 million for a controlling 65 percent share of the franchise. Give the Hansen group 100 percent of the expansion club for $350 million. Existing owners each get $11 million for the trouble, and the league gets back into lucrative Seattle.) Hansen can break ground on his arena ASAP. The expansion Sonics would play in KeyArena for one year and then move to the new building in 2015-16. Sacramento, meanwhile, would likely open its new downtown arena for the 2016-17 season. It's hard to see how anyone loses in this scenario.
So ... how about the Kings this season, eh?
Let's go ahead and stop there.
The Hook is an NBA column by Tom Ziller. See the archives .