Tycoon Death Derby? Hansen’s mega-ante Friday shows he has no patience for alternatives of litigation or expansion. He wants the NBA Kings now.
If basketball fans in Seattle and Sacramento can step back from their emotions just a moment, I hope they can appreciate that they are participants in a sports spectacle more epic than anything they will witness on an NBA court.
In a showcase week for how American business truly works, the Seattle bidders for the NBA Kings answered a kickback from the Sacramento bidders with a bribe. The game grows so ruthless that soon someone will leave the gun and take the cannoli.
Friday, Seattle bidder Chris Hansen posted on his website that he increased his offer $75 million for a total valuation of $625 million, which amounts to an attempt to buy votes of fence-sitting owners who will gather in Dallas Wednesday to decide the issue.
The “sweetener” comes after the Sacramento bidders sweetened their bid by telling the NBA before the relocation vote that they will kick back its share of the league’s annual revenue-sharing once the Kings are in a new arena proposed for downtown, a sum estimated currently to be around $18 million annually for the have-not Kings.
Since we still have a few days to go, before the vote, is it reasonable to expect that we are edging closer to a virgins-into-the-volcano stage? Well, in a manner of speaking, yes.
According to a source with whom I talked by phone, who was knowledgeable of Hansen’s plans but who didn’t want to be identified, mostly out of fear of a court-ordered mental-health evaluation, “There’s more.”
Lock up your daughters.
While the speculation about motives and strategy has commenced fearsome chattering among the digirati locally and nationally, Hansen was fairly straightforward in his post:
“While we appreciate that this is a very difficult decision for the league and owners, we hope it is understood that we really believe the time is now to bring the NBA back to Seattle,” Hansen wrote. “It is paramount that we do everything we can to put Seattle’s best foot forward in this process.”
To me, that means Hansen is not putting stock in either of two alternatives that have been objects of speculation since Hansen was denied in a 7-0 vote two weeks ago by the NBA’s relocation committee: Litigation or expansion.
He doesn’t want this purchase and arena project to be delayed. Period.
Doesn’t want to sue. Doesn’t want a promise of expansion in a year, or two, or three. He wants the Kings.
Right. Damn. Now.
I get that. If he is denied, he knows that the blow will be equally damaging financially and emotionally. The threat is real that he will not be able to re-assemble for a second try the personal, public and political energy that the current project has gathered.
With Mayor McGinn, a solid Hansen supporter, up for re-election this year in a field of seven, there is no guarantee that his tenancy will survive the primary Aug. 6. If it does, he has to get through general election Nov. 5.
As important, marshaling public passion for a third joust over an NBA franchise after being hosed twice in five years seems daunting at best. At least right now. What they do have right now is a signed purchase and sale agreement with the family that owns the Kings, and a lot of money.
So the motive for the latest gambit is plain. What about the strategy?
Sacramento Mayor Kevin Johnson was quick to dismiss the latest twist in the saga, reiterating NBA Commissioner David Stern’s point in February that the outcome “would not be dictated by a bidding war,” he wrote in an email. Well, after the kickback by the Sacramento bidders, it’s a little late for that now, yes?
Johnson continued that the issue has always been about Sacramento’s ability to create an ownership and an arena that “ensures the franchise can rebuild and thrive.” That’s true, but as recently as this week, two sources familiar with the situation said that the Sacramento bidders were still soliciting more investors to join. And the Sacramento Bee reported this week that the NBA has “encouraged” the Sacramento bidders to put in 100 percent of the cash that would go to the Maloofs into an escrow account. Hansen’s $525 million has been in escrow for some time.
The NBA has a reasonable apprehension that the commitment to continue in Sacramento, especially with the downtown arena plan in its infancy, will not work, given the remaining obstacles as well as the haste with which it was assembled.
On the other hand, Hansen’s first increase in the bid price, $25 million, was “not recognized” at the Board of Governors meeting April 19, according to the same source, ostensibly because it wasn’t part of the original purchase and sale agreement signed with the Maloofs in January. Whether that was a procedural matter or a genuine disqualification isn’t known, but the tactic could provide a workaround for the anti-Hansen crowd.
The big unknown is whether the new, $625 million valuation will move the needle to Seattle for some owners, only 16 of which are needed to approve relocation. The source said the original vote by the relocation committee was 4-3, but the dissenters were asked to throw in their votes for the sake of unanimity.
Hansen’s new increase, if accepted, for the 65 percent share the Maloofs own means the sellers would gross $406 million, compared to the $341 million asked from the group led by Silicon Valley billionaire Vivek Ranadive. Even for the mega-wealthy owners of the NBA, that difference is significant.
Unpopular as are the Maloofs, they remain members of the lodge, and $65 million is $65 million — a windfall upon windfall no owner would have anticipated as recently as early January, only a year removed from a lockout.
As much as owners love the principle of supporting smaller markets and would like to hug the pro-Sactown Stern at every turn, $65 million is, as has been suggested, $65 million.
One strategic virtue of the increased offer is that it may force owners to at least allow the vote on the sale, which requires three-quarters (23 of 30) approval. That would allow an airing of the choice between principle –or, as Johnson put it recently at a press conference, “the high road” — and pragmatism.
In 2008 with the Sonics, the owners ignored principle and went with the pragmatic move to Oklahoma City. We shall shortly find out if they’ve taken the cure — at Seattle’s expense.
In the meantime, more drama will unfold. All that we ask for is no horses’ heads in beds. It’s been done.