BY Art Thiel 07:13PM 04/16/2013

NBA owners’ vote on Kings Friday put off

David Stern was accurate — the NBA will not be voting Friday on whether to keep the Kings in Sacramento or move them to Seattle. The NBA commissioner said after presentations April 3 in New York by both cities that the choice was so “weighty” that the league might need more time. Mayor Mike McGinn disclosed the postponement Tuesday at a press conference.

McGinn talked about a completed deal to upgrade KeyArena agreed to by Chris Hansen, who needs the old building for a couple of seasons before his new building is ready. He then told reporters of the delay.

NBA spokesman Tim Frank confirmed the postponement, indicating the vote may wait a week or two after the discussions set for Wednesday with a committee of owners, followed by meetings Thursday and Friday for the full Board of Governors (owners). A vote may be done by email.

Besides Stern’s early warning, the likely delay was known to other NBA executives, including one who told Sportspress Northwest over the weekend there was “no way” a vote would happen Friday.

Beyond the need for more study time, does the delay represent anything else?

Two possibilities loom:

  • Stern’s effort continues to give Sacramento every last chance for it to match the Seattle offer, or
  • The owners are giving more serious consideration to expansion as a potential solution.

At nearly the same time as McGinn’s press conference, Sacramento mayor Kevin Johnson was having one of his now-traditional pep rallies to introduce publicly the ownership group he has hastily assembled for a counter-offer to Hansen’s proposal valued at $550 million, as well as creation of a plan to build a $447 million arena downtown.

But Johnson did not definitively say whether his group matched the Seattle offer, including an additional $25 million Hansen put down Friday to buy the team from the Maloof family.

Asked by the Sacramento Bee whether the offer will match the Seattle increase, Johnson said, “I don’t think that was our focus. The last-ditch effort by the Chris Hansen group — he has his prerogative to do that. We felt we made good on what we said we are going to do. I think the NBA and the Maloofs are comfortable with that.

“We’ve done what we said we’re going to do. It’s in their hands.”

Stern’s willingness to give more time has been seen by a number of NBA writers and executives as not only based on his relationship with Johnson, but his strong desire to avoid relocating another team in the final year on the job. He will retire Feb. 1. A move now would represent a partial failure of the collective bargaining agreement Stern worked so hard to achieve. He believes that in a couple of years all teams would be in a position to break even in every market.

But there are owners who recognize that Seattle is a better, if busier, market, that Hansen’s arena plan is farther down the road, and that the $30 million deposit paid to the Maloofs represents a commitment that the Maloofs want to keep. If it is an either/or decision, those owners would vote to approve a relocation and tell Stern his legacy is intact and unbruised by another relocation.

But if the owners seek to split the baby by keeping the Kings in Sacramento and awarding an expansion franchise in Seattle, that will require considerable debate about diluting future revenues as well as the basketball talent pool in exchange for a one-time expansion payment probably north of $500 million to be share equally among 30 teams.

The contrasting views apparently will get an airing starting Wednesday with the meeting of the combined relocation/finance committees, which are supposed to have a report for the board to consider Thursday. No presentations will be made by the cities.

The NBA has some urgency for a decision because Hansen has applied to start this fall. If he is awarded the team, has to move quickly — although the Sonics were moved successfully to Oklahoma City after a trial that ended in July.

In the KeyArena deal announced by McGinn, Hansen has the right to find a naming-rights sponsor — Key Bank’s agreement expired in 2010 — and sell sponsorships. He has guaranteed the rent as well as city jobs at the same salaries and benefits for the length of the Sonics stay — at least two years.

The agreement with ArenaCo will guarantee the city at least $2 million in use fees annually with additional income based on ticket sales and the unlikely event of an NHL team being acquired.

At least $3 million in upgrades must remain behind when the team leaves, including upgrades in seating, technical and security systems and improvements to locker rooms and the concourse.


YourThoughts

  • OffTheLows

    The solution isn’t necessarily expansion, but the guarantee of a new team so that either city could begin work on a new arena. I suspect the guarantee of a new team would be by fall of 2016, when the new national TV deals would begin. The distinction of a new team guarantee would mean for the next few years as arenas go through regulatory hurdles and are constructed, efforts may be made to move other financially troubled teams so that the league doesn’t have to expand, Bobcats or Bucks come to mind. That would likely be the NBA’s preference. When people talk expansion, they reflexively think it would be for Seattle, but given Sacramento’s bid was hastily arranged and they appear behind the Seattle group, the new team guarantee could be for Sacramento and be timed in a way to soothe the anger of an approved sale to Hansen.

    • art thiel

      The NBA can’t guarantee that “a new team” ever will be made available, because it is the right of any owner to sell to a qualified buyer at any time. The NBA can only approve relocation, not force it on a purchaser. And the whole point of the lockout that led to the more favorable CBA for owners was to help preclude relocation.

      So expansion is the NBA’s only option to grow. Every owner would think it foolish to uproot a team to an empty market while planning to backfill the old market with expansion. It is far easier and more logical to make Seattle wait a couple of years.Yes, I know the NFL did it with the Browns, but no league will volunteer again for that hell, and the NBA isn’t the NFL.

      • OffTheLows

        I’m saying that in between the time that a new arena is built, the NBA can tell a city you will get a team via expansion or relocation so that they can build the arena without fear of having no team to inhabit it. Obviously there would be a drop dead point between now and fall 2016 when the city would have to have a team, so 2 years from now and no existing team/owner has been found for this city, at that point they would be awarded expansion. I just see no point of the NBA awarding a team expansion right now when it won’t play for 3+ years, guaranteeing a 31st team when there are a few teams with bad economics that if they can’t find local buyers or negotiate new arena deals may want to sell to either the Seattle or Sacramento groups.

      • Gary

        Can’t guarantee? I have to disagree on this one Art. Stern stood center court in OKC and said just that. He then proceeded to arrange the Sonics exit. Will he do it again?

      • jafabian

        They did that with the Hornets though. And the Bobcats are paying the price for it.

    • http://twitter.com/CaseyLytle Casey Lytle

      I’ve wondered for a while now if the Sac “counteroffer” has anything to do with the Seattle sale and everything to do with securing another team, likely the Bucks. Everyone is evasive when comparing their bids to the Seattle bid. City and fan interest in Milwaukee has been gone for a long time, and the Sac group better fits Kohl’s idea of minority owners who will be ready to be majority owners in a couple years. The Sac group can’t sign a binding deal because Ranadive hasn’t given up his minority share of the Warriors yet, and doesn’t seem in a hurry to do so.

  • jafabian

    Funny how Johnson calls the increase in Hansen’s bid as a last ditch effort. Sh’yeah, right. There’s more where that came from if needed. IIRC, Steve Ballmer cashed out over a billion in Microsoft stock a year ago and Nordstrom stock closed at a steady 56.17 today.

    The NBA could do a Cleveland Browns scenario, one that should have been done when Clay moved the Sonics but was never done. The league could allow Hansen to move the team to Seattle, keep the Kings history in Sacramento (along with the Kansas City, Cincinnati and Rochester history) and award them an expansion team in 2-3 years as they finish their own arena financing. And looking at how all divisions are pretty evenly numbered right now it would give the league an opportunity to try and add at least one more expansion team though I agree owners aren’t going to be thrilled about diluting the revenue pool. No wonder Sterno is going to retire.

    I predict the NBA will drag things out until after the playoffs so as to not take the focus off their postseason stage.

    • art thiel

      Won’t wait that long. This decision is too important to rush but the playoffs are a separate non-issue.

  • SeattleNative57

    I agree, Prince Kevin saying “last-ditch effort” about anything related to the Seattle offer is hyperbole in the extreme. Sacramento’s effort is, by definition, last-ditch. As this drama plays out it is becoming clearer to me that the NBA is conducting its own Manhattan Project in order not to lose almost $500 million by declining either one of these bids. Something will be done in order to bring Seattle back into the fold. It just makes sense, regardless whether the league expands and dilutes revenue temporarily. The Seattle addition will almost immediately pay for itself considering the vitality of its market vis-a-vis Sacramento. Remember, Sacramento takes shared revenue in the CBA arrangement, whereas Seattle likely pays.

    • art thiel

      Yes, KJ calling out someone else’s bid as desperate is the silliest thing he’s said.

      You’re right — the NBA is trying to make this win-win, but with incomplete arena plans in both cities, they also fear some degree of lose-lose.

  • Michael Kaiser

    “But there are owners who recognize that Seattle is a better, if busier, market, that Hansen’s arena plan is farther down the road, and that the $30 million deposit paid to the Maloofs represents a commitment that the Maloofs want to keep.” Well, ya, although, as an aside, “better” is a rather elastic term and the owners care little, in the big picture, about the Maloofs. And there is no way Sacramento should give Seattle the down-payment money Hansen put up, or the extra $25 million. Make Hansen eat it, which is exactly what Sacramento is going to do as a payback. Sacramento knows its deal will not break over that money. As said earlier, Seattle might get an expansion team out of this, but for several hundred million more than they needed to pay.