SBD/March 26, 2013/Franchises

Sacramento Group Adds Fourth Member To NBA Kings Bid In Qualcomm's Jacobs Family

Paul Jacobs and his family's participation could help in tonight's City Council vote
Warriors Vice Chair and NBA Kings bidder Vivek Ranadivé last night announced the group bidding for the team, also consisting of Penguins co-Owner Ron Burkle and 24-Hour Fitness co-Founder Mark Mastrov, "has added a fourth member" in the Jacobs family, which owns Qualcomm, according to a front-page piece by Kasler, Bizjak & Lillis of the SACRAMENTO BEE. Ranadivé said that the Jacobs bring "heft and a pan-California persona to what he called the Sacramento 'dream' team." The announcement's timing gives Sacramento Mayor Kevin Johnson "added momentum going into tonight's council vote" to decide whether the city should invest $258M in a "public-private partnership" to build a $448M downtown arena. Johnson said that he "wants to send a 'resounding' message" to the NBA that city officials are "solidly behind keeping the Kings." City Council member Steve Cohn "met with Burkle and Mastrov in Sacramento," and said that the deal is "superior to the one he supported last year." Cohn said, "I feel a lot better having met with them about their commitment. They feel it's very important to act on it this week so we don't lose momentum" (SACRAMENTO BEE, 3/26). In Seattle, Bob Condotta cites sources as saying that while tonight's Sacramento City Council vote "would be nonbinding, simply getting an arena deal approved would send a loud signal to the NBA." The term sheet is "expected to be approved without much opposition." With Ranadivé and the Jacobs family now on board, it is "expected" the group will "up the ante." That means Seattle and Sacramento will head to N.Y for a pair of meetings with the NBA next month with "what could be fairly similar packages." However, having a "higher public contribution might favor Sacramento since owners generally favor deals in which less money comes out of their own pockets" (SEATTLE TIMES, 3/26).

A TALE OF TWO CITIES: In Seattle, Nick Eaton wrote the NBA may see both cities’ plans as "similarly sound." But the Seattle group led by hedge fund manager Chris Hansen has what "could be a trump card: an actual, pen-on-paper agreement with" Kings Owner the Maloof family. A deal with Seattle also would allow NBA owners to "split a relocation fee." The NBA would "jump from having an underperforming team in the 20th largest television market in the U.S. ... to a reinvigorated franchise in the nation’s 12th largest TV market." It would be "strange, perhaps, for the NBA to reject a tangible agreement to buy a franchise for a record price, especially since Hansen’s purchase of the Kings -- not the league’s most esteemed team -- would drive up the value of other NBA franchises." Eaton: "Then again, it might seem equally strange for the NBA to reject a competitive bid from a city that already has a team and wants to keep it" (SEATTLEPI.com, 3/25).

PROPERTY VALUE
: In Sacramento, Phillip Reese cites real estate experts as saying that the downtown properties that Sacramento officials are proposing to give to developers "will increase sharply in value once the arena is built." The city is giving arena developers land it says is worth $38M as a "chunk of its contribution to the arena's construction." That is about "twice as much land as the city proposed selling on behalf of the Maloofs ... in an aborted deal last year" (SACRAMENTO BEE, 3/26).

LAYING LOW: In Sacramento, Ailene Voisin writes Burkle is "only occasionally seen and rarely speaks." It is said that Burkle would "rather slide across the ice on his backside than sit down for a chat with journalists." Former Pennsylvania Gov. Ed Rendell said, "Ron totally eschews publicity, but he is one of those people who has a great instinct for what works. Sacramento could not get a better result than having Ron buy the Kings and develop downtown." With the Penguins, as "presumably would be the case here, he leaves team operations to others and expends his energy expanding his business empire." Rendell: "Ron is a very, very tough negotiator, but he's very fair. If he's going after the Kings and downtown redevelopment, it's because he knows he can make money, which will be good for Sacramento" (SACRAMENTO BEE, 3/26). In L.A., Daniel Miller notes Burkle "has invested" in the new Three Lions Entertainment company along with publishing exec Richard Beckman and Greenberg Traurig LLP shareholder Joel Katz. Three Lions will "produce network television programs that embed advertisers' products within the shows" (L.A. TIMES, 3/26).
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