Maloofs Demand Sacramento Group Seeking NBA Kings Formally Bid By Tomorrow
NBA Kings Owner the Maloof family has "given Sacramento an ultimatum: Come up with a solid bid" to purchase the team by 8:00pm ET tomorrow or they "won't even entertain" future overtures, according to sources cited in a front-page piece by Bizjak, Lillis & Kasler of the SACRAMENTO BEE. A source said that if the Maloofs "receive a matching offer" by the end of business tomorrow, they will "consider it as a serious backup proposal should the NBA nullify their tentative deal with Seattle." The Maloofs said that they "wouldn't negotiate with the Sacramento group" if the offer does not arrive in time or falls short of matching the Seattle bid. Sacramento Mayor Kevin Johnson last night "wouldn't speculate on why the Maloofs delivered the ultimatum." But he said that the Sacramento investors are "following the rules laid out by the NBA and are in regular contact with the Maloofs and their lawyers." Johnson, regarding whether the Maloofs know how much the Sacramento group is bidding, said, "They know the number -- trust me, they know the number." He added the Sacramento group's latest offer is "essentially everything it needed to be" in terms of competitiveness with Seattle. However, he said that he "doesn't know if it has been submitted to the Maloofs in legal, contract form." It is "not clear if the Maloof ultimatum carries any legal force." The question of how the family would "respond to a rejection of the Seattle plan has been one of the great mysteries surrounding the Kings drama" (SACRAMENTO BEE, 4/11).
TAKE COVER: A source said that the NBA has asked the Sacramento group, if they want to win, to cover the $30M fee the second-place Seattle group would lose by not getting the club. The NBA declined to comment. The Seattle group's purchase agreement with the Maloofs includes a $30M non-refundable deposit. Were the Kings to stay in Sacramento, the Seattle group would lose that money. However, a source said that in not wanting for Seattle to be discouraged if they do not get the team, the league wants to make the group’s effort whole. Presumably, that would be a show from the NBA that even if Seattle were not to get the team, the league remains high on the market. The Maloofs' 65% share of the team translates to $341M. With the extra $30M, the Sacramento group would need $371M in cash, minus any assumed debt. The group also has a nonbinding agreement with the city of Sacramento for a new $447M arena, of which the ownership has to cover $190M. They also would be responsible for the $77M of debt on the current arena. The Sacramento group is expected to submit its final package to the NBA tomorrow, and on the same day announce some new investors. The league’s BOG meets next week, but is not expected to pick a winner then. Details of the package are key as there has been talk that the quickly-assembled Sacramento group will have trouble matching the financial muscle of the Seattle group led by Microsoft CEO Steve Ballmer and hedge fund manager Chris Hansen (Daniel Kaplan, Staff Writer).
BIDDING WAR? NBA Commissioner David Stern last week at the NBA BOG meeting said he did not want the Seattle/Sacramento battle over the Kings to become a "bidding war." However, in Seattle, Bob Condotta notes it is "thought the Seattle group can increase its offer for the Kings" if it so chooses. Kings co-Owner George Maloof represented the team at the meeting, and reiterated that the family "wants to sell the team to the Seattle group." It "won't be much of a debate if the Sacramento group does not have an offer that matches that of Seattle's" (SEATTLE TIMES, 4/11). CSNBAYAREA.com's Ray Ratto wrote some people might consider the Maloofs giving the Sacramento group an ultimatum while already having a binding deal done with the Seattle group "an act of bad faith, and frankly, it isn't an act of good faith by any means." Ratto: "In a deal like this, the seller has the leverage ... and leverage and good faith tend to collide with each other." Seattle is "still the favorite to win the owners’ vote on the 18th because of its considerable advantages," but Hansen and Ballmer must "wonder anew with whom they’re dealing with here" (CSNBAYAREA.com, 4/10).