Defiantly denying Seattle and exhorting his flock in the manner of a Baptist minister, Sacramento mayor Kevin Johnson turned his annual State of the City speech into a civic pep rally Thursday night by delivering on his promise to identify the people and the plan to keep the Kings in his hometown.
Before announcing the names of Mark Mastrov, who made his fortune creating 24-Hour Fitness centers, as the counter-bidder for franchise ownership, and California supermarket developer Ron Burkle as the builder of a new arena downtown, Johnson fired a shot across the bow of Seattle native Chris Hansen and fans and politicians who believe the Kings will be renamed the Sonics and play at KeyArena starting this fall for two or three seasons:
“With all due respect to Seattle — I do hope they get a team someday — let me be perfectly clear: It is not going to be this team. Not our team. No way.”
Mastrov and Burkle were linked to the plan almost since the day it was announced that the owners of the Kings, the Maloof family, signed a sale agreement with Hansen, who has proposed to relocate the team to a $490 million basketball/hockey arena he wants to build in SoDo. What was new was the location, a downtown plaza rather the nearby railyards that was part of a deal a year ago made with the Maloofs, who later walked away.
Another newsworthy development was that a largely known group of more than 20 business people — now including former NBA star Mitch Richmond, who played seven of his 13 NBA years in Sacramento — pledging $1 million each to be part of club ownership, was actively pursuing a seven percent share of the club that is in federal bankruptcy proceedings. A minority owner uninvolved in the Maloof-Hansen transaction, which valued the franchise at $525 million, is liquidating assets to satisfy creditors. At that price, a seven percent share is worth $36.75 million.
Lawyers for the minority owner, Bob Cook, have said they believe terms of their ownership include a right of first refusal on any sale. If true, they may be able to thwart the sale to Hansen. On the other hand, Hansen made a $30 million deposit on the sale that has created a business relationship with Maloofs. Any move that competes with the relationship could be subject to litigation based on tortious interference.
Burkle was the lone “whale” identified by Johnson. The owner of the NHL Pittsburgh Penguins who helped bring the team from bankruptcy to the 2009 Stanley Cup championship, Burkle was said by Johnson to have reached agreement with the new owners of the plaza, JMA Ventures, to develop the arena and surrounding businesses.
Burkle, listed by Forbes as the 148th richest American with assets of $3.1 billion, has seen his Penguins jump in value from an estimated $110 million during the bankruptcy to $222 million, according to Forbes. The club is rated by the magazine as the fastest growing team brand in the NHL and one of the fastest growing in all sports.
He was a force behind the creation of the $321 million Consol Energy Center that houses the Penguins. Most of the mortgage on the public building — $15 million a year over 30 years — comes from state and local gambling revenues. The team contributes more than $4 million a year. The club also received potentially lucrative development rights to an adjacent 28 acres of land, including the Mellon Arena site.
Johnson said Mastrov will submit a bid to the NBA Friday. He was among the final bidders for the Golden State Warriors before Joe Lacob and Peter Guber bought the team for an NBA-record $450 million in 2010.
“I’ve been assured by the commissioner of the NBA (David Stern) that we will be given full consideration,” said Johnson, a two-term mayor and a former NBA All-Star who was the lone speaker. Mastrov and Burkle have not spoken publicly about their involvements.
However, Johnson’s speech was light on details. Not disclosed was the amount of Mastrov’s proposed offer, how the Maloofs will be forced to consider it, or any details of the arena plan and the public contribution to its creation. The previous proposal for the railyard location included a $255 million contribution by turning over to arena developers future downtown parking proceeds for up to 30 years. Earlier this week the city council approved a $150,000 budget item to study a new arena proposal.
In Seattle, Hansen already owns the land, has approvals from the city and council pending an environmental review, and has booked KeyArena to house the team for two or three seasons. Sacramento will be in a full scramble to create a similar achievement before NBA owners vote on the request to relocate the Kings April 19.
The normal NBA protocol is to have a purchase offer considered separately from a relocation vote. The league’s by-laws require
only a two-thirds majority vote to approve a sale but a simple majority two-thirds majority for a relocation.
Stern said at the NBA All-Star Game that he combined the committees to consider this scenario, but didn’t explain how that would work. Having two cities submit roughly similar proposals for one team is unusual, and perhaps unprecedented. Normally the city losing the team has exhausted its options for retention.
But Johnson has consistently made the argument that the NBA has never left a city where everything was done that was asked of it. Thursday was his first concrete step toward fulfilling that commitment.
Now that Sacramento will make a formal offer, chances increase for legal challenges to the Maloofs for the legality of deal with Hansen, and later perhaps to the NBA by the losing city regarding its procedures for determining an outcome. Litigation would seem likely to delay a resolution in time for the NBA’s October start to to the 2013 season.
Updated at 12:12 p.m.: Correction on NBA votes required for sale and relocation.