BY Art Thiel 08:33PM 04/03/2013

Thiel: Faced with dead heat, Stern blinks — a bit

Calling it a “weighty” issue, NBA Commissioner David Stern all but put off the vote on the Kings’ relocation, not wanting quite yet to deny either of two strong bids.

Who does the NBA tell to drop dead: Steve Ballmer or Ron Burkle?

In a sentence, that difficult question is why NBA bosses went temporarily into a fetal position Wednesday regarding the fate of the Kings, a once-plain franchise that is suddenly Angelina Jolie, Heidi Klum and Kate Upton all rolled into one purple pile of pulchritude.

In a remarkable display of public haplessness, a tired-sounding NBA Commissioner David Stern said he didn’t quite know what to do with the bids of Seattle and Sacramento in the unprecedented pursuit for a free-agent franchise.

“There is a lot at stake here for two communities and the NBA,” he said. “It is a weighty issue.”

So he all but postponed the vote on the relocation to some time past the original plan of April 19 at the Board of Governors’ regularly scheduled meeting.  The delay is significant on at least two levels: Sacramento, led by California supermarket-magnate Burkle,  is officially credible as a bidder, and owners already may be divided in ways unseen.

A remark easily overlooked from Stern says a lot about the impressions left after the cities made two-hour presentations back to back at the St. Regis Hotel in Manhattan.

“Every owner seems to have different questions,” he said. That says in the power politics of the NBA boardroom, each bidder has friends and enemies regarding the same goal: Increasing as fast as possible the post-lockout value of each franchise.

Stern and the owners always say their plans are driven by fans’ desires. But by now, the presumption is that the hunt to find the last person to believe that will take longer than getting bin Laden. The owners are driven by franchise appreciation, and want to know whether a team in Seattle or Sacramento will get them more money faster.

That’s why the post-presentation media chat by the Sactown crew was more intriguing than Seattle’s. Chris Hansen was confident and careful with his words, as were Mayor Mike McGinn and King County Executive Dow Constantine. All well and good.

But beyond the ebullient Sactown mayor, Kevin Johnson – the guy former Sonics coach George Karl called “Princess” during his NBA playing days –  the bid’s lead investor, Vivek Ranadive, a Silicon Valley billionaire orginally from India, offered the most intriguing sales pitch of the day: NBA 3.0.

The original NBA was the pro version of the game that began in New England’s high school gyms, he said. The 2.0 version was the David Stern era  (blatant suck-up there).  The future of pro basketball, Ranadive said, was about three things: Technology, globalization and an agency for change.

It’s easily possible to dismiss the storyline as the airy dreams of a tech geek, and that may be true.  But Ranadive is already a minority owner of the Golden State Warriors. He knows what plays well to his audience, nearly all of whom made their fortunes to some degree by looking ahead and capitalizing.

“It’s about NBA 3.0, which is really making basketball the sport of the 21st century – what soccer was to the 20th century,” he said. “At one point (in history) China and India were two-thirds of the the world’s economy, and at some point in the next couple of decades, that probably will happen again.

“This opportunity (in Sacramento) is to bring together all of the stakeholders – fans, city and state governments, ownership and the NBA (to) create the 21st century coliseum and have the needle move on the city.”

Now, for all we know, Steve Ballmer may have made a similar pitch to the owners — nothing Ranadive said is beyond the reach of the Seattle bidders — but he didn’t submit himself to media scrutiny, which was a missed opportunity.  And Ranadive’s view had nothing to do with mundane stuff like buying up all the parcels of land for the proposed arena, or fighting off litigation in Sactown, or all the other things still to be done that Hansen has done in Seattle with his head start.

But anyone who has made enough money to own an NBA team didn’t get that wealthy by sweating the small stuff.  And small stuff includes the popular current image of Sacramento as the potty break between San Francisco and Tahoe.  To the rest of the world at one time, Seattle was merely fishnets, sawdust and Boeing metal-benders until some cockamamie idea came about to host a World’s Fair. Perhaps you’ve heard – or lived – the rest of the story.

I don’t think anyone can forecast the outcome right now because, for once, I will take Stern at his word that this decision is “far more complicated” than simple economics between the cities. It is also hard to deny that things seem to be close to a dead heat.

I did notice another thing in Stern’s remarks. Asked about the increasingly plausible notion of a solution via expansion, Stern again shot it down, saying it would be “imprudent” to add another team, which is generally true when perhaps as many as a dozen teams will be losing money this season. The full benefits of the new collective bargaining agreement have yet to appear.

But Stern’s remarks about the expansion question began with the phrase, “right now,” and ended with the phrase, “right now.”  By the end of the month, it will no longer be “right now.”

Stern is right about expansion being “imprudent,” just as he is right that this situation is unprecedented in NBA history. And if anyone were to offer the word “imprudent” to any of the owners during their previous business successes, said person would be shown the window – not the door.

So expansion still has to be in play in the boardroom. Either that, or the guy who draws the short straw gets to tell Ballmer/Burkle to drop dead. Neither of them is prone to even opening a window before putting someone through it.


YourThoughts

  • Michael Kaiser

    There is no way Seattle is getting the Kings, which I also said a long time ago. Stern’s comments today about pushing the deadline back, and now basing the decision-making process, in large part, according to him, on BOTH cities’, at least, shorter-term “sub-optimal” arena problems, is Stern giving you one of the major “outs” the NBA is going to use to turn down Seattle. And on the off-chance that I am wrong and the NBA does
    give the Seattle group the go-ahead, Kevin Johnson will almost undoubtedly tie
    this thing up in SACRAMENTO-based courts. And, regardless, there is absolutely no way the Kings are going to be up in Seattle for next season. Now Hansen should stop wasting everyone’s time and get an expansion hockey team.

    • art thiel

      Stern has always wanted Sactown to step forward, for three years. And they have, with serious, vetted pro sports owners (Burkle, Ranadive). The issue of old arenas for two years is secondary, or Stern wouldn’t have given permission to proceed under that premise. The NBA is much more concerned about the new arenas, which will not be done, or even started or permitted, by the time of the vote.

      And I doubt that the city who still wants back in the league would sue to do so, although the threat of it is part of the league’s thinking trying to come up with a consolation prize for the loser. Like expansion in 2-3 years.

      Hockey will always be in second place.

  • http://www.facebook.com/profile.php?id=1599001255 Adam Lewis

    Great column boss.

    My rudimentary understanding of capitalism leads me to question the belief that the Kings have a 50-50 shot of staying in Sacramento.

    Even if Stern rejects the Hansen group’s offer, there is no almighty power requiring the Maloofs to sell to Burkle and Co. What would prevent them from keeping the team and letting it continue to bleed financially until another ownership group emerges? Don’t they have a right to sell to whoever they want to?

    Then again, the NBA is essentially run like a cartel — See Chris Paul trade to Lakers, 2003 Kings-Lakers Playoff Series — so who knows.

    This whole saga has had more plot twists than an M. Night Shyamalan production.

    Here’s to hoping the end won’t be as awful as last four movies.

    • Michael Kaiser

      I don’t think you get it. At this point the Maloofs mean absolutely nothing to the NBA. The Maloofs have indicated they no longer want to be part of the fraternity and so to the other owners the Maloofs are simply a marginal irritant on the way to whatever the NBA decides is going to happen with the Kings. And the Maloofs can not do a thing about it. People get to buy, and sell NBA franchises to certain parties, only if the NBA gives its OK. And in case you have not noticed, not one substantive word is being said about what the Maloofs want. The Maloofs deal with Hansen only could fly unobstructed if no competing bid was put forth, especially by Sacramento.

      • art thiel

        Yes, the Maloofs want out, and the NBA wants them out. But to minimize litigation, the deal has to be massaged, and I think that’s the prime source of the delay.

        What do the Maloofs want? The most cash. Therefore, they are Hansen’s best buddies.

    • art thiel

      There is no capitalism in a monopoly operation. The league creates by-laws to allow it to do things not a part of ordinary business. The league forced George Shinn to sell in Charlotte. The Maloofs could carry on, but that means losing millions annually that they don’t have. They may hate Burkle, but they hate losing money more.

      And if you don’t like plot twists, don’t look the next three weeks or so.

  • seattlenative57

    Beg to differ with the Maloof influence here if I may. In case you weren’t paying attention, Gavin Maloof was in attendance and did speak during the Seattle presentation. The Kings owners went on record favoring the Hansen-Balmer ownership. Lest we not forget, the Maloofs own this team and no amount of cajoling, arm twisting or tampering will change that. Even if the BOG favor the Sacramento plan, they cannot force them to sell. The committee can only deny the sale to Seattle, as that is the only deal agreed to thus far. The Maloof preference does carry weight in this proceeding. Regarding Prince Kevin Johnson and Sacramento-based litigation …poppycock! The courts have long ago established the right of the NBA to decide its ownership. Those lawsuits will be dismissed quicker than you can say OKC robbed Seattle. The only sale this committee is deciding is the only one on the table, up or down. Sacramento ‘s proposal is a counter offer, and if preferred, is not binding on the Maloof’s.

    • art thiel

      Yes, the NBA can manipulate the Maloofs to sell. Again, this is not America; this is a monopoly operation, a cartel, and my guess is that they have the equivalent of pictures of the Maloofs in unpleasant situations.

      The Maloofs want Seattle to get it because Hansen is paying an out of town price higher than Sactown would pay. And the Maloofs don’t want to continue because that means losing millions in annual operations that they don’t have.

      But you are right about Johnson suing. It worked for the Pilots against the American League, but the evidence was so overwhelming that the AL asked to stop the trial less than half way through and agreed to provide an expansion team in 1977. The 2013 NBA is not as stupid as the 1970 AL.

      • seattlenative57

        Just as the Maloofs are motivated to maximize the franchise value, so too are the other team owners. That maximum value directly affects their pockets as well. From what I understand from various reports, the Sacramento offer did not reach the Seattle value. Whether this factor alone affects the sale is unknown. But franchise value will impact the final outcome.

        • art thiel

          As far as I know, the Sac price has not been confirmed, but the number may well reflect the lack of a relocation fee as well as the absence of the need to pay off the city’s $70M loan to the Maloofs. But the net amount into the Maloofs has to be just about the same, or Sactown has been wasting everyone’s time, including its own.

  • Matthias

    Goodness, if the Sonics move goes through aren’t you going to look like the tart! ;) There are some good points here and I agree that a move to Seattle is not a foregone conclusion. That said, every point that could be seen in Sacramento’s favor is magnified in this article, while many of the pluses for Seattle are not. What, did we expect the NBA to immediately tip its hand on which way this would go? Not a chance. Balmer outdone in describing a brave, new, and global tech world? Not a chance. Oh, and there is the matter of that one proposed owner already owning part of a team, but I’m sure that can be easily cleared up. A delay of what looks like a few days is given HUGE import. Ha, that’s not going to make a difference in the decision. Stern’s arena comment is not even mentioned in the article, perhaps because Seattle’s is further along in its new arena plan and it doesn’t rely on parking revenue dreams? Is it coincidental that even before Stern’s arena comments that Hansen and the City are talking about $20 million in Key Arena improvements? Not a chance. There is communication going on here and the side that is quieter is in the lead. Oh they’ll draw it out so as not to alienate Kings fans (as much). I do sympathize that in covering Seattle sports for so long that the articles cannot help but have a bent that is prepared for disappointment. ;) Enjoyed the article, but will respectfully disagree on there being a dead heat. It’ll all remain conjecture of course until the decision comes in.

    • art thiel

      The emphasis on Sacramento’s position was because the counteroffer has been much less understood than Seattle’s, which is clear, clean and nearly baked. The Seattle presentation underscored what was largely understood; Sacramento, on the defense from the get, explained itself and has to do more to sell itself because the PSA rests in Hansen’s hands.

      Sacramento made a showier presentation, but remember they were scolded three weeks ago for not having enough done to even merit consideration with Seattle. Apparently, they have caught up, at least regarding the NBA’s need for more time.

      The thing Sac has going for it is Stern’s reluctance to move a team when its city has done a lot over the years, and now, to keep its team. Stern knows that the last few years of attendance decline is because the Maloofs are broke, not because of decline in fan passion.

      As far as disappointment, a lot of Seattle fans would be dismayed, but if an expansion commitment is made, a lot of Seattle people in the long run will feel better instead of taking another city’s team. Empathy, y’know? It’s not illegal.

  • Eric K

    think you bring up a good point about the owners wanting to do whatever drives up the value of their franchises the most.

    Hansen was willing to way overpay for the Kings and now if local owners match his bid then Cha-Ching for the rest of the owners. They get the Kings sold for a windfall and still have Hansen and Balmer as viable owners in a major market chomping at the bit to over pay even more for their team.

    Gotta think having Sacramento as the empty market is much less attractive.

    The counter to that is two issues.

    1) the Seattle Arena deal is much further along and much more stable. How real is the Sacramento deal vs smoke and mirrors?

    2) if you burn Seattle again do you risk pissing off Balmer and Hansen to the point where they say screw you were taking our billions and buying the Mariners instead.

    • art thiel

      The Seattle arena deal is mostly baked, the Sactown arena deal is not even half-baked, for all the reasons related to the late start. The question is how fast can Sactown bake? No one knows.

      Regarding burning Hansen, I think it’s a major reason for Stern’s dilemma. I don’t think Hansen will quit after a turn-down, but he’ll need a commitment to expansion. He’s thought this through very carefully and anticipated multiple outcomes.

  • Gary

    All the evils of pro basketball are playing out before you all over again and you are right the plot is going to get very thick now. What is that name for hostages that grow attached to their captors.

    Sterns comment:

    “We heard a day full of extraordinary presentations of a complex real estate, arena, construction timelines, potential obstacles and team funding in two really great cities,” Stern said. “It was a long day without any breaks and both sides made, in my view, very, very strong presentations.”

    Per this statement where do you think they will stay, what will be the easiest road especially if the offers are even.
    On the flip side there is some great high school basketball here to attend and you don’t have to max out the credit card to do so.

    • art thiel

      Stockholm syndrome.

      I think Seattle is in the lead, but the internal discussion of expansion probably will get underway shortly. HArd to know the outcome.

  • “9090″

    Art,
    It’s all about the money, right? If Stern is convinced that Sacto is economically a winner for NBA franchise owners and Seattle is even better, then he keeps the Kings in Sacto and reluctantly allows those Howard Schultz hate mongers in Seattle a franchise. It can’t hurt his owners, right? Who else has to be bought off for a buy in to expansion? Best

    • art thiel

      The owners need an expansion fee sufficient to cover the revenues for several years surrendered to a 31st team.

  • bobscrat

    What the NBA should do here is convince Michael Jordan to give up the Bobcats, and award that francise to Seattle, keeping the Kings in Sactown. Essentially, turning two unprofitable situations into profitable ones. What the NBA will probably do is award an expansion franchise to Seattle, to start play in say 2-3 years, giving Seattle ownership time to get the new arena built. It’s a “win win”. This gives the league time for the CBA to take effect, and makes the transition smoother since they can add Seattle to the northwest division seamlessly with the natural rivals. It also lets Seattle fans idle and look forward to getting the new team, rather than be ticked off at the NBA. David Stern will not turn his back on people with this kind of money, he may be a crap weasel, but he has never turned down a buck.

    • art thiel

      The NBA will take no initiative to move a team. That is the province of ownership.

      Expansion is a solution, and I think Stern oversold the obstacles working against expansion because he didn’t want the option on the table until owners heard directly from both bidders and could ask their own questions. Then the expansion possibility can be introduced based on facts in hand.

  • 1coolguy

    The NBA won’t move a team that meets its’ requirements for staying in its’ present location and Sacramento seems to have met that. Unfortunately.

  • sean23

    It seems to me that there is really no option other than expansion – though I think it will be Seattle getting the Kings and Sac getting expansion.

    If you think through all of the options, the NBA has to be concerned that if they don’t satisfy both Seattle and Sacramento the loser will not be willing to play stalking horse. From a Seattle perspective, I think Hansen is in for the long haul but even if he can keep Ballmer and the rest of his investment team together, McGinn and Constantine may not be re-elected and enthusiam from the fans, business community, and politicians will wane. All of the old anger will re-surface. I also think the other owners don’t want to create a precedent of turning down a fellow owner. I think its now or never for Seattle.
    There are a number of teams losing money. I would think they would choose to expand and could always contract a team later.

  • http://www.facebook.com/herb.huseland Herb Huseland

    It’s not really even. Remember that the Seattle buyers already have a signed purchase agreement for the team. It would be awkward to make the team stay in Sacramento with Seattle ownership