Tuesday, March 26, 2013
SEATTLE — The wait for the NBA’s decision regarding the fate of the Sacramento Kings is growing shorter. Also getting smaller might be the lead that many observers figured a Seattle group once had in fending off Sacramento’s efforts to keep the team.
The Sacramento City Council is expected to vote tonight on a term sheet for a $447-million downtown arena that would serve as a new home for the Kings.
While the vote would be nonbinding (meaning, a vote approving the actual spending of the $258 million in city money would come at another time), simply getting an arena deal approved would send a loud signal to the NBA, say some observers.
“This addressed a core reason why the league has been willing to see the team go — because there wasn’t a strong arena deal,” said Michael McCann, a legal analyst for NBA-TV. “But that seems to be, in a nonbinding way, rectified.”
The term sheet is expected to be approved without much opposition — the council approved a similar deal last March by a 7-2 vote.
Still, Sacramento Mayor Kevin Johnson appeared to be taking no chances Monday. He held a late-afternoon news conference that seemed designed mostly to communicate the urgency of approving the term sheet with as much consensus as possible. He said it was important for the city to send a resounding message to the NBA, and that today had a chance to be an “historic day” for Sacramento.
The term sheet helps complete the package Johnson has attempted to assemble to fight back against efforts of a group led by Chris Hansen and Microsoft CEO Steve Ballmer to relocate the team to Seattle, where it would be renamed the Sonics and begin playing next season.
Hansen’s group reached an agreement in January to buy the team from the current owners, the Maloof family, buying 65 percent of the team for roughly $340 million at a total valuation of $525 million.
Johnson has helped assemble an ownership group now led by Vivek Ranadive, a Silicon Valley entrepreneur who is a co-owner of the Golden State Warriors. NBA commissioner David Stern said an initial offer from the group was not competitive with the one made by Hansen.
The Sacramento Bee reported Monday night that the group has been further bolstered by the addition of the Jacobs family, which heads up Qualcomm.
It is expected that with Ranadive and the Jacobs family aboard, the Sacramento group — which also includes 24 Hour Fitness founder Mark Mastrov and Pittsburgh Penguins co-owner Ron Burkle — will up the ante.
If so, that means Seattle and Sacramento will head to New York for a pair of meetings with the NBA next month with what could be fairly similar packages.
McCann said that addition of Ranadive to the Sacramento group and the completion of a term sheet for the arena “means Sacramento has definitely improved its chances.”
Representatives of each group will meet a committee of NBA owners April 3 to state their case. The groups will then meet before the full NBA Board of Governors at its annual meeting April 18-19. At the latter meeting, the official vote will be taken. Many observers, though, say the decision could largely be determined by the first meeting.
At $490 million, Seattle’s deal to build a new arena in the Sodo District has a price tag higher than Sacramento’s, but with a lower public contribution — $200 million in public bonds that would be repaid with taxes and rents generated by the arena.
However, having a higher public contribution might favor Sacramento since owners generally favor deals in which less money comes out of their own pockets.
Sacramento’s arena deal calls for $212 million to come through the organization of a nonprofit that would borrow against future parking revenues controlled by the city. An economist at the University of the Pacific, Jeff Michael, told The Sacramento Bee that “there’s a lot of speculation” whether the parking revenues will be enough.
McCann thinks it could help Seattle that its arena deal appears less risky. The website FieldofSchemes.com, though, wrote in an overview of the Sacramento deal Monday that the NBA has generally not worried much about the sources of funding for arenas.
“They’re not going to care how Sacramento pays for an arena, so long as the city is guaranteeing to fund it somehow,” wrote author Neil deMause.
McCann also notes that the NBA’s first order of business is voting whether to approve the sale of the Kings to the Hansen/Ballmer group and that there is no apparent guarantee the Maloofs would sell to the Sacramento group if the Seattle purchase is denied.
“They would have to know from the Maloofs that the Maloofs would sell,” he said. With the Seattle group, the Maloofs and the NBA have taken vows of silence since the purchase was announced in January, though, that’s one of many unknowns that remain.
“There’s still just a lot of moving pieces,” McCann said.