Letter: Maloofs favor Seattle's deal for Kings
The Maloof family is asking NBA owners to approve the sale of the Kings to a Seattle group, saying there is "significant distance between us and the Sacramento group."
In a letter sent to the NBA's relocation and finance committee, and obtained by The Associated Press on Friday, the Maloof family said the Sacramento group originally matched the $525 million valuation for the franchise negotiated by Chris Hansen, who is heading the Seattle group. Hansen then increased the valuation offer to $550 million last week.
The Maloofs said the Sacramento group has asked not to enter into a binding agreement until the Seattle deal is terminated. The Maloofs said that would be a breach of contract and cost them the "leverage to aggressively renegotiate terms in the event the existing agreement is terminated."
The Maloofs said, under terms of the Hansen deal, they were allowed to enter into binding "back-up" offers until owners approve the agreement, according to the letter. The family said it would breach its contract with Hansen if it terminated the deal but that the Sacramento group continues to insist it do so.
"Based on these factors ... we and our advisors see no reason to continue any dialogue with the Sacramento group or to give any further consideration to negotiating back-up offers based on its latest non-binding proposal," the letter said.
Maloof family spokesman Eric Rose declined to comment on the letter. Ben Sosenko, a spokesman for Sacramento Mayor Kevin Johnson, also had no comment.
NBA Commissioner David Stern said earlier this week that the joint committee assigned to issue a recommendation on the issue has not made a decision and no vote is expected until at least May. Stern was scheduled to address reporters Friday following the NBA Board of Governors' annual meeting in New York.
The Maloofs reached an agreement in January to sell a 65 percent controlling interest in the Kings to Hansen's group at a total franchise valuation of $525 million, an NBA record. With pressure mounting from Sacramento's counteroffer to keep the team, Hansen announced last week he would "voluntarily" raise the valuation to $550 million.
Stern has said expansion is not an option right now. The Board of Governors, consisting of all 30 NBA owners, was briefed on the matter during meetings Thursday and Friday in New York.
If a vote is taken at some point in the next couple weeks, the Seattle group needs 23 of 30 owners to approve the sale of the team. A simple majority 16 votes is all that's needed to approve relocation.
Stern has said previously that the sale of the Kings would not become a bidding war. And yet, a bidding war is exactly what seems to have broken out.
Hansen put down a $30 million deposit, while the Sacramento group has only offered $15 million, according to the Maloofs' letter. The Maloofs also have expressed concern to fellow NBA owners about the changes to Sacramento's group, saying the reason new investors keep surfacing is because of a "lack of funds."
Led by Johnson, Sacramento has fought back over the past three months to make the sale and relocation of the Kings a real debate. Johnson pushed a non-binding financing plan for a $447 million downtown arena through the Sacramento City Council complete with a $258 million public subsidy and lined up an ownership group to compete with the powerful Seattle contingent.
The potential Sacramento ownership group is led by TIBCO software chairman Vivek Ranadive, also a minority owner of the Golden State Warriors. Others who have joined the bid include 24 Hour Fitness founder Mark Mastrov, former Facebook senior executive Chris Kelly and the Jacobs family that owns communications giant Qualcomm.
Ranadive and Mastrov were copied in the letter sent to the NBA committee.
Johnson has announced new investors to join the bid over the last few weeks but has not said publicly what each person's financial contribution would be. Billionaire investor Ron Burkle, a co-owner of the NHL's Pittsburgh Penguins and once a key cog in Sacramento's group, was forced to back out of the bid two weeks ago because of a conflict of interest created by his stake in a company that manages some NBA players' careers.
Johnson was in New York on Friday but it was unclear whether he would address owners again. The mayor said at halftime of Sacramento's season finale against the Los Angeles Clippers on Wednesday night the he was "very confident" in his city's bid.
"I think the advantage has to go to the home team," Johnson said before the Kings lost 112-108 to the Clippers during an emotional season finale. "We're an incumbent."
The Maloofs also had other concerns with Sacramento's offer.
The family said the Sacramento group refused requests to make sure Kings employees' contracts were not terminated for 18 months after closing the deal. The Maloofs said Hansen's group agreed to this suggestion "without hesitation," according to the letter.
The Maloofs said important financial information on the Sacramento investors has not been disclosed, and also said Sacramento is "significantly behind in its efforts to develop an arena."
Hansen and the city of Seattle and King County reached agreement last fall for funding on a new $490 million arena. He also plans upgrades at KeyArena, where the team would play for two or three years until a new home is constructed.
Construction on the building could start as early as the end of 2013 but only if a team is secured. The purchase offer based on a $550 million franchise valuation which implies selling the 65 percent stake for about $357 million would be $100 million more than Joe Lacob and Peter Guber paid for the Warriors in 2010.