Sacramento and Seattle have presented competing plans to the NBA; what happens next?
City officials and business leaders from Sacramento and Seattle took turns presenting their respective plans to purchase the Sacramento Kings from the Maloof family and build new arenas to a group of NBA owners behind closed doors. The final decision is supposed to be made during NBA Board of Governors meeting on April 18 and 19 based on the information presented yesterday.
In case you haven't been following the story, in January a deal was reached between the Maloofs and a group led by Chris Hansen and Steve Ballmer for 65% control of the team, which would mean the return of the Sonics to the Emerald City. Sacramento mayor and former NBA player Kevin Johnson came to Sacramento's rescue. He and his team found potential buyers in Mark Mastrov and Vivek Ranadive and put an arena deal of their own together with Ron Burkle.
Obviously, the NBA has a lot to consider in this decision and many factors are at play. Does David Stern want to make nice with Seattle before he steps down and attempt to salvage his legacy? Will Vivek Ranadive's international connections and experience help with the NBA's recent push to increase its presence in Asia? Will the owners set a precedent in favor of publicly funded arenas like Sacramento's, which could save them millions when their teams need new arenas? Or will they go for the option that puts a team back in a larger TV market? (By the way, for all those that say Sacramento is not a big enough market to support an NBA team, Sacramento's 2.2 million people in the metropolitan area ranks 27th in the U.S., ahead of other NBA cities Cleveland, Indianapolis, Milwaukee, Oklahoma City, New Orleans, and Salt Lake City. Additionally, Nielsen estimates that Sacramento is the 20th largest TV market in the country in 2013).
A lot of speculation exists about these and other considerations, but my crystal ball isn't working today, so I'll just discuss a fact that I think may play a larger role in the NBA Board of Governors deliberations: the Maloofs agreed to sell the team to the Hansen-Ballmer group.
In 2006, when Clay Bennett purchased the Seattle Supersonics from Starbucks CEO Howard Schultz, the NBA Board of Governors voted unanimously in favor of the sale. 18 months later, the owners voted 28-2 to approve relocation of the team to Oklahoma City despite court battles and public unrest in Seattle. Before that, the Charlotte Hornets and Vancouver Grizzlies had their own local arena battles that resulted in relocation votes by the NBA owners.
These situations are obviously different from the current one - in part because there are two viable options this time around - but there is a theme here: the NBA tends to let owners do what they want. For all of the moral and merit-based arguments in favor of one city or the other or the marketing potential of one group over the other, the fact of the matter is that the Maloofs and the Seattle buyers reached a deal. Hansen and Ballmer were smart. Cynics in Sacramento believe that the Maloofs - after insisting for years that the team wasn't for sale - agreed to the Seattle deal because they want to stick it to the city for failing to provide a new arena. I think the simpler and more realistic explanation was that the Hansen-Ballmer offer was too rich to pass up.
Every year, Forbes releases its list of the most valuable NBA teams along with an estimated valuation. In 2009, the Kings were 22nd with a valuation of $305 million. In 2010, they came in 24th at $293 million. In 2011, they ranked 23rd at $300 million. While the market doesn't necessarily abide by Forbes' calculations, it shows the consistently unimpressive perceived value of the franchise. The Hansen-Ballmer offer valued the franchise at a whopping $525 million, more than enough to get the Maloofs' attention. Because of this offer, Forbes' most recent franchise valuation lists the Kings as the 11th most valuable franchise, ahead of the Oklahoma City Thunder and Los Angeles Clippers.
Maybe valuing the Kings ahead of the Clippers isn't so smart, but making a bold statement and putting a lot of money in front the Kings cash-strapped owners certainly was. Perhaps that was precisely what was needed for the Maloofs to finally loosen their death grip on the Kings.
Given the Board of Governors' recent track record when it comes to team sales, it seems unlikely that the NBA will go against the decision of one of its owners, even though those owners are not especially well-liked, to say the least. And, to the dismay of many in the Sacramento region, the Maloofs do own the team and have the right to do with it what they please.
Over the last few weeks, Sacramento has been making headlines and revealing more and more information about its coup to keep the team in advance of yesterday's presentations. Observers note that Sacramento has the momentum but the fact of the matter is that it's Seattle's to lose. They have the agreement in place and if the Kings are to stay in Sacramento, the NBA will need to do something it's done just once in recent history: block the sale and relocation of a team. That happened back in 1994 when New Orleans attempted to lure the Timberwolves out of Minnesota but the league's owners voted unanimously against the move because of weaknesses in the financing plan. Unfortunately for Sacramento, Hansen and Ballmer won't have any issues coming up with the dough and have already been willing to go above and beyond when it comes to writing big checks.se.
Of course there are countless other factors at play. Marketing, future arena deals, TV market size, globalization, and so much more will likely cross the minds of the men making this important decision over the next couple of weeks, and rightfully so. We can try to predict each owner’s personal incentives and what the league’s priorities are, but for now all we know is that yesterday kicked off a few weeks of serious deliberation for a small group of rich guys that will have lasting consequences for millions of people. Meanwhile the rest of us will wait impatiently.
Stay tuned for more Sacreattle SuperKings developments.