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AEG Revenue/Profit Projections Played Key Role In Maloofs Rejecting Arena Deal

The arena deal rejected by NBA Kings Owners the Maloofs "would have brought the team around" $11M per year in profits, according to AEG projections cited in a front-page piece by Dale Kasler of the SACRAMENTO BEE. Confidential revenue and profit projections developed by AEG were submitted to Kings co-Owner Gavin Maloof last November in a letter from President of NBA League Operations Joel Litvin. Those numbers "outlined the fundamental assumptions behind" the $391M project, but "failed to persuade the Maloofs that the deal made sense." Even though a Kings exec "provided historical input, the Maloofs dismissed AEG's projections." The Maloof family indicated that that played a "big role in their decision to scrap the deal last Friday." NBA Senior VP/Marketing Communications Mike Bass said Thursday the numbers "reflected our view at the time." Bass: "Since then, we've revised the number up slightly to $13 million to reflect additional projected revenue from team sponsorship inventory." Litvin wrote in a letter that those estimates also "didn't include another" $15M the Kings "expect to receive that year under the NBA's new revenue-sharing plan for small-market clubs." Kasler notes what "isn't known is how AEG's estimates of profits compare with the Kings' current financial picture." Team co-Owner Joe Maloof said last weekend the Kings are "one of four or five teams making money." But the Maloofs "haven't given a more specific breakdown of team finances." While the Maloofs were also "upset with certain terms of the arena deal, their dismissal of AEG's numbers was a key reason they say they walked away from the project." Maloof family economic consultant Christopher Thornberg said last week that AEG "based its projections on the Kings' performance" in '05 and '06, when the team "was a contender and the Sacramento economy was overheated by a real estate boom" (SACRAMENTO BEE, 4/20). Basketball HOFer Oscar Robertson, who is being honored before Friday's Thunder-Kings game, said, "I've always said the worst thing you can do is negotiate in the newspaper. (The Sacramento City Council, Mayor Kevin Johnson and the Maloof family) have all got to sit in a room and work it out. ... You've got to be careful. Finger pointing and blaming does not help at all" (SACRAMENTO BEE, 4/20).

COMMUNITY SERVICE: The SACRAMENTO BEE's Kasler noted the Maloofs "continued their outreach efforts to the community Wednesday, this time targeting the Sacramento business owners who called for new ownership of the Kings." Kings PR Dir Chris Clark said that Gavin Maloof "spent the day talking to suite holders at Power Balance Pavilion as well as the two dozen business owners who asked the NBA last week to install new ownership of the team." Clark said, "The large majority (of the calls) are going very well." The Kings indicated that about 88% of season-ticket holders have "renewed for next season, among the highest percentages in the league" (SACRAMENTO BEE, 4/19).

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