Category Archives: Politics

01.18.13
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No please, really, take your time Oakland

The Coliseum Authority released its agenda for the upcoming January 25th meeting. On the agenda is a procedural item of voting a new Chair and Vice-Chair. The other item, 6b, involves the following:

6b. Resolution of the Oakland Alameda County Coliseum Authority:
1. Waiving Competition and Authorizing Staff To Negotiate One or More Professional Services Contracts to Conduct

Studies for Site Planning and Development Scenarios, and to Create Estimates Of Building Budget And Profit And Loss Statements, For a Potential New Stadium and Related Development on Land Currently Owned By The Authority That Lies Within the Coliseum City Specific Plan Area, for a Total Amount Not To Exceed $500,000; and

2. Authorizing Staff To Competitively Procure and Negotiate One or More Professional Services Contracts to Conduct Studies of Revenue Potential and Market Demand From a Potential New Stadium and Related Development on Land Currently Owned By The Authority That Lies Within The Coliseum City Specific Plan Area, for a Total Amount Not To Exceed $500,000; and

3. Authorizing the Chair of the Oakland Alameda County Coliseum Authority to Execute Contracts for Services With Selected Consultants Without Returning to the Authority Board; and

4. Amending the Authority’s Budget to Allocate up to $1,000,000 in Available Oakland Alameda County Coliseum Authority Funding For These Purposes

Woah there, wait a second. Is the JPA really saying that it still has studies to complete? It needs to do financial projections and a development plan? And it’s executing this now without competitive bidding? You have got to be kidding me. This stuff was supposed to be done by now. Funding for Coliseum City was authorized in February 2010, almost three years ago. This is supposed to be the easy part.

Now, maybe the upshot is that the Raiders and JPA came to an agreement on a lease extension, allowing these funds to be freed up. But if anyone from the East Bay is looking for signs of progress soon, this certainly won’t help. At this rate the 49ers will have been at their Santa Clara stadium 7-10 years before anything gets built in Oakland. Also, note that the resolution says stadium in singular form. Will there be a two-stadium alternative, as some pols believe is the best option? Or are they talking about another multipurpose stadium? I can’t wait. Actually, I guess I can. I have no choice.

I suppose these “additional” studies can be completed by the end of the year. In a week full of unbelievable BS news in the sports world, this ranks up there, at least locally. Suspiciously, the JPA’s annual financials have not yet been released. They probably won’t show much in the way of funds spent on Coliseum City so far. This is so disappointing, and yet, par for the course. No wonder the Warriors plowed their own path. They can’t trust the JPA to make anything happen in a timely manner.

01.18.13
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David Stern’s Reverse Solomon

As much as I enjoy much of the drama in the Kings-Sacramento-Seattle love triangle, even I don’t want to bog down this blog with daily updates on the situation. If a deal is signed, the Maloofs apply for the move, or something happens in April when the NBA’s Board of Governors is set to meet, I’ll write about it. Until then, the Kings issue is best relegated to the weekly newswrap.

However, I’ll take this story in a different direction. There’s a solution on the horizon, one that can satisfy all parties: the Maloofs, Chris Hansen, Mayor KJ and Sacramento civic leaders alike. It all starts and ends with two old guys who spent a couple of years in St. Louis.

What’s that, you say? There’s no NBA team in St. Louis? Well, that’s absolutely correct. There hasn’t been a NBA franchise in St. Louis since the A’s moved to Oakland. The St. Louis Hawks moved to Atlanta and never looked back. The only other pro basketball team that has graced the city since is the ABA Spirits of St. Louis, whose two-year stint in the Gateway City was marked more by off-the-court actions than on-court.

That’s because when the ABA merged with the NBA, Spirits team owners Ozzie and Daniel Silna pulled off one of the greatest deals in the history of pro sports, one that continues to benefit the Silnas and haunt David Stern to this day. As several ABA franchises such as the Baltimore Claws and Virginia Squires sputtered to the end, other franchises that were in better financial shape were under consideration to be brought in as new NBA franchises. Eventually, the NBA decided it would accept only four teams into the league: Denver, Indiana, San Antonio, and the New York Nets. It was the culmination of several years of lawsuits, threats, and strife for both leagues as the NBA was struggling with huge image problems. Two teams remained to be dealt with, the Spirits and the Kentucky Colonels, long regarded as the most stable franchise in the ABA. The Chicago Bulls had NBA rights to Artis Gilmore, and they wanted him so badly that they blocked the Colonels from being included in the merger. The NBA paid $3.3 million to Colonels owner John Y. Brown, Jr. to fold the franchise. Soon after the merger, Brown, who owned KFC prior to getting into the pro hoops business, bought the Buffalo Braves and later swapped that for the Boston Celtics.

Ozzie and Daniel were a different story. Instead of taking the $3.3 million payout, they chose to take only $2.2 million and a 1/7th share of national TV revenues for the 4 merged teams in perpetuity. Back in the mid-70’s, no one knew how big the NBA would be. It was common for playoff games and even the finals to be broadcast on tape delay. The Silnas’ prescience became legendary as the league took off only a few years later with Magic-Bird and then soared to unimaginable heights with Michael Jordan. Ever since, the brothers have been getting a 4/7ths team share of national TV money, which has grown exponentially since 1976. In recent years that 4/7ths share has meant around $17 million every year for doing absolutely nothing. It’s the height of rent-seeking, and the crazy thing is that last September, they filed suit to get even more! Now they want cable and international TV dollars, claiming that they lost everything during the Bernie Madoff scandal. No settlement has yet been reached between the Silna brothers and the NBA.

This is where the Kings come in. We know that the franchise’s value has been inflated because of the sale talk and the Maloofs’ financial liabilities. It’s a situation in which one city will come out the winner of the franchise, while the loser may get a “promise” of an expansion team down the road. When it comes to expansion, leagues tend to be hazy on their promises, especially when the leagues don’t really need the cash (like the NBA) and owners naturally don’t want to slice off another piece if they can help it. Yet there’s an interest in getting rid of the Silnas, who have long been a thorn in Stern’s side. Some kind of buyout would also help the 4 former ABA teams, since they’d be on a level playing field in terms of national TV money. 3 of the 4 franchises are in small/mid-markets, so this is no joke.

While the Kings will be sold in a straightforward transaction, the “losing” city’s prospective ownership group can pay an expansion fee, which thanks to Kings-related inflation, should be $500 million. Take some of that money ($200-250 million) and give it to Silnas and their lawyer, while splitting the rest up 29 ways (new Kings owners not included). The other teams would get a one-time $8.6 million-$10.9 million infusion, and future TV money would be split 31 ways instead of 30.57 ways inequitably. The downside is that all other shared revenues would also be split 31 ways, but that’s limited to merchandise and other non-TV sources (not tickets). The Silna brothers walk away with a quarter billion dollars, Stern fixes that nagging legacy problem, and fanbases in Seattle and Sacramento are happy. The NBA would do well to solve this problem before TV contracts come up for renewal after the 2014-15 season. By acting now, owners will have complete cost controls and expanded revenue sharing throughout the life of the CBA.

Funny thing to point out – the total combined national TV revenue for the ESPN/ABC/TNT deals is $930 million annually. It’s quite a coincidence that the total splits into 31 neat, $30 million shares. The solution only works if the Silnas are interested in a big lump sum payout, which they have rebuffed twice already. A quarter billion dollars, however, may be an offer they can’t refuse.

01.17.13
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Two mayors, two different approaches

Some people are going to view this post as more piling on Oakland. It’s not. It’s a demonstration of what leadership is, and what it means to follow through. You’ve been warned.

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Many of the mayors throughout the country are in Washington this week to attend the US Conference of Mayors, where the big topic is gun violence and how to reduce it. The big fish at the event is Vice President Joe Biden, who President Obama tasked with developing a plan for gun control and other related initiatives.

In the face of increasing criticism over her effectiveness in handling the crime and murder rates in Oakland, Mayor Jean Quan left for the conference earlier this week. Her office says that she is “hoping to have conversations” on how to reduce the crime rate, which frankly, sounds like a bad excuse for taking a trip to DC for the inauguration. Maybe she’ll get some kind of commitment from someone in a federal capacity, but VP Biden’s team put together the plan and President Obama signed 23 executive orders without needing Quan to be in DC.

Also in DC for the conference is MC Hammer, who became an employee of the city’s Convention & Tourism Bureau last November. Hammer’s position is to promote tourism, which I have to imagine is a difficult sell when everyday there are headlines about one shooting or another. So there are two Oakland leaders in DC at the moment.

Now all of this would be little more than your typical Washington hobnobbing session if it weren’t for the actions of Sacramento Mayor Kevin Johnson, who abruptly canceled his trip to DC. Why would he cancel the trip even as he was scheduled to speak?

The things that KJ is referencing are his efforts to put together (in parallel) a competing ownership bid that would keep the Kings in Sacramento and an arena package that would be acceptable to David Stern and the NBA owners. KJ is working with a deadline of March 1st. Quan’s deadline for both the Raiders and A’s is effectively the end of the year, so she technically doesn’t have to act too swiftly. But it’s telling that while East and West Oakland are going to hell, Quan is in DC just a month after going to China. In both cases, she’s trying to find solutions, money, or both outside of the city. On the stadium front, Quan has created one task force or another and authorized money for a Coliseum City study which has not yet materialized. There isn’t much to show for Victory Court or Howard Terminal (so far) for that matter. Meanwhile, KJ is rallying forces in the Sacramento region to find a solution. It’s a stark contrast, and while there’s a good chance neither will be successful in the end due to circumstances beyond their control, it’s clear that there’s one mayor who’s trying, and another who’s simply asking for help and not actually doing much.

Then again, this is Quan’s last Twitter update (she’s more active on Facebook):

Welp.

01.16.13
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Super Bowl Musical Chairs

In May the NFL owners are expected to award the Super Bowl L (50th Anniversary in 2016) to either Miami, or San Francisco/Santa Clara. The loser will get to square off with Houston for the right to host Super Bowl LI in 2017.

Officials in Miami are scurrying to make improvements at Sun Life Stadium that will make it continue to be viable for future Super Bowls including L/LI. Recently, the NFL had been hinting that Sun Life Stadium could end up out of the game’s regular rotation (every 5-7 years) if changes weren’t made. That’s possible now that the Marlins have left, allowing the Dolphins to remake the stadium as a football-only facility.

Improved viewing distances to the sideline and displays should make Sun Life Stadium more appealing

Improved viewing distances to the sideline and displays should make Sun Life Stadium more appealing

To accomplish those goals, the Dolphins plan to add seats along the lower level to reduce the 90-foot gap between the first row and sideline. They’ll also replace all of the existing seats, which will be colored turquoise instead of orange. (I think we’ve all learned over the years that orange seats don’t do well in the sun.) Sections in the upper deck corners will be reduced to accommodate large video board. Sun Life received two of the largest boards in sports a few years ago. Those will probably be moved with two others added. The big addition is a free standing canopy that will cover much of the seating bowl and upper concourse.

Will that be enough? While Miami is a veteran of putting on big events like the Super Bowl, it lacks ancillary features at Sun Life that could bring in more revenue, such as a convention center. South Beach is 18 miles away from the stadium, closer than the distance between the Santa Clara stadium and what is expected to be the media hub in downtown SF.

Dolphins owner Stephen Ross has pledged to pay for the “majority” of the project’s $400 million cost, with no new taxes as part of the promise. Some public funds could come from a sales tax rebate on items sold in the stadium. 8 of the 9 pro teams in Florida already receive this benefit. The Dolphins are the only ones that don’t. The team estimates that this will raise about $3 million per year, which would go towards debt service on the improvements for 30 years.. Additional funding could come from hotel taxes.

The 49ers and the City of Santa Clara are being asked to make their own concessions, though the requests are not of the stadium. Instead, the NFL wants the nearby Santa Clara Convention Center, Soccer Park (next to the 49er HQ), blocks of hotel rooms, and perhaps a cut of different revenue streams.

It’s all part of the laundry list of items the NFL usually asks for from host cities. The NFL has the leverage in this relationship, and their M.O. has always been to pit cities against other every year to get the best deal possible. We discussed this laundry list a year ago. The league asks for a lot, and in most cases, they get it.

Santa Clara is also unique in that it controls its own power utility, Silicon Valley Power. City backers have been quick to note this as a way to cut costs. However, the NFL could just as easily make demands of the City to extract the lowest possible cost for power during the week. Down in the Phoenix area, Salt River Power is giving a $1 million sponsorship for 2015’s Super Bowl XLIX, which includes numerous services the utility controls.

It’s also unclear how the Super Bowl could affect operations out of SJC on gameday. When planes take off during good weather, they head north before quickly turning east for the most part. If the weather is bad, SJC reverses its approach, having planes land from the north. That puts those planes rather low and – as I noticed over the Thanksgiving weekend when I flew in from SoCal – directly over the stadium.

Neither city should expect to get much in the way of direct tax revenues. They’ll be able to tout an immense amount of acute economic activity, and for most cities, that’s plenty.

Other cities are working to keep up appearances. Houston’s bringing in new scoreboards, while Charlotte is looking to state legislators to approve $125 million in improvements at Bank of America Stadium. The NFL sees this and loves it. It’s all part of the game to get The Game.

01.14.13
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Kings sale Update #3: More players enter the fray

Does anyone remember a journeyman outfielder named Eugene Kingsale? 4th-5th outfielder type? He started out on the O’s with fellow Aruban Sidney Ponson before going to Seattle. His career ended right about the time the Sacramento Kings stopped being a good NBA team. Kingsale? Seattle? Don’t you dare call it a coincidence.

Let’s try to reset this Kings mess, shall we?

On Saturday, real estate investment firm JMA Ventures expressed in helping the Kings stay in town. Originallly, reports had JMA building an arena on the site of the mostly empty Downtown Plaza shopping mall, which JMA bought from mall giant Westfield last summer. This remains true. What does not is the idea that JMA might also bid on the franchise. That’s not happening, though there are whispers that Ron Burkle may be networked in to buy the team while JMA builds and operates the arena.

If the name JMA Ventures sounds familiar, that’s because it is the company that offered to buy Great America from theme park operator Cedar Fair late in 2011. That deal fell through, as Cedar Fair was granted some parking lot protection and other concessions by the City of Santa Clara in exchanging for dropping a lawsuit. Westfield sold Downtown Plaza because it was a heavily underperforming property. JMA paid $22 million for the mall, partnering with LA firm Downtown Properties to complete the deal.

An arena and associated development on a nice, 14-acre site sounds like a great way to turn $22 million of uncertainty around, and it can’t hurt JMA to get involved, especially since they knew that Downtown Plaza was considered as a potential arena location.

Later Saturday night, Sacramento Mayor Kevin Johnson was seen talking to interested party Mark Mastrov courtside at the Heat-Kings game. Meanwhile, co-owner Gavin Maloof was reportedly selling his area home and everything inside it.

Over the weekend, a Sacramento-based ticket pledge campaign called Here We Buy was launched. As of this writing, the campaign has claimed 1,192 pledges for a combined $3.8 million.

Unfortunately, JMA’s involvement may end up as little more than a footnote in this saga, as Yahoo’s Adrian Wojnarowski today filed a revealing column about the advanced state of Kings-to-Seattle sale talks. The deal points:

  • $525 million is the purchase price based on valuation.
  • The Hansen-Ballmer group would purchase 65% of the team. That comes to $341.25 million. The team’s minority partners, who are largely Sacramento based, would probably sell their own stakes sooner rather than later to other interested (and probably linked to the Seattle group) parties.
  • It remains unclear if the Maloofs will retain any stake in the franchise.

All of this sounds less rather discouraging if you’re a Sacramento Kings fan. Yet, it’s following much the same playbook used by Clay Bennett, Michael Heisley, and George Shinn on their way out of town. Bennett was able to buy out a lease for Sonics I. Heisley ran the Grizzlies into the ground. Shinn did the same with the Hornets. The Maloofs are only bound by debt to the city, but they are about to get that paid off by billionaires.

Sacramento will probably be left with the rights to and history of the Kings, going back to Tiny Archibald and Oscar Robertson. Stern might grant the city first dibs at an expansion franchise after he retires. While Stern and the Maloofs sail off into the sunset, the City drowns in the Sacramento River.

Let this be a lesson for those who seek to play hardball with pro sports franchises: You may think you have leverage. You don’t. You really don’t.

01.11.13
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Conflicting reports escalate Kings sale story

Dueling reports today on the Kings. First, CSN’s Matt Steinmetz reported that the deal to sell the Kings to the Hansen-Ballmer group is all but done, with the price rising to $525 million. That may have been enough to convince the Maloofs to sell and back off any demand for partial control of the team. That was followed up shortly thereafter by a report by CBS Sports NBA reporter Ken Berger, who tweeted that 24 Hour Fitness owner Mark Mastrov has expressed interest in buying the Kings and has met with the Maloofs to boot.

You may remember that a group led by Mastrov ended up as a runner-up to the Lacob-Guber group in bidding for the Warriors (2nd or 3rd depending on where Larry Ellison falls in). Mastrov is only worth $350 million, but his group was vetted by the NBA to participate in the W’s bidding, so there’s no reason to think he wouldn’t be legit if his group were reconstructed to buy the Kings. Sleep Train CEO Dale Carlsen also threw his hat in the ring. It’s unclear at the moment if all of these various rich guys (plus more to come) would put together competing bids or pool their resources.

The Maloofs reportedly own only 53% of the team with controlling interest, with the rest owned by various local limited partners. Joe Benvenuti, who had the largest minority share, died last May. Benvenuti was the developer who built both ARCO Arenas I & II in partnership with Gregg Lukenbill.

To complicate things, David Stern made remarks that seemed to have him leaning towards Sacramento if a “local” group trying to keep the team in town came forward. Of course, Stern and the NBA’s Board of Governors is the final arbiter of the team’s fate, as they would not only approve any relocation effort, but also any incoming ownership group. It’s unlikely that any Sacramento group would be approved unless an arena deal were done first. That would leave Mayor Kevin Johnson with the task of resurrecting the Railyards arena plan, which was scrapped last April when the Maloofs couldn’t come up with their share.

The price to keep the Kings in Sacramento may be up to $107 million lower than the Seattle bid, because there’s the $30 million relocation fee and the $77 million arena purchase-leaseback loan was constructed as a poison pill. Now, if I’m a local bidder and David Stern, I might push KJ hard to forgive the loan for any incoming group. That would allow the debt load to lighten significantly and free up resources to pay for the new arena. There would remain environmental issues with the Railyards arena plan and it would still require a vote, but those can be dealt with.

It’s only going to get more dramatic and difficult for fans in Sacramento and Seattle. Expect nothing to be finalized until we get really close to March 1.

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Update 7:00 PM – Dale Carlsen was interviewed by Grant Napear today. Carlsen clarified that he wants to help keep the Kings in Sacramento, but that won’t be done by him “writing a check”. Instead, he’d work to rally the business community to coalesce around whatever the solution is.

Update 1/12 12:00 AM – Mayor Johnson claims that he can put together $400 million or more so that a local group could buy the Kings.

Update 1/12 2:00 AM – Ric Bucher is bringing up the idea that the Maloofs still want to maintain some level of control over the team and may threaten to take the team to Anaheim, or even file an antitrust lawsuit against the NBA if they don’t get their way.

01.10.13
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$500 million and rising

There’s no done deal. And there probably won’t be one tomorrow, or even by next week. We know that the Maloofs and the Hansen-Ballmer-Nordstrom group are in serious discussions about selling and moving the Kings to Seattle. Everything else is just details.

Here’s what we understand about the situation going in.

  • The Seattle group has pitched $500 million at the Maloof family.
  • The Seattle group’s combined net worth is at least $17 billion, with Microsoft CEO Steve Ballmer’s piece being the largest at $14 billion.
  • Murmurs of the Maloofs looking to sell started in the last two weeks.
  • According to Forbes, the Kings are currently worth only $300 million. The Maloofs paid $156 million for the franchise in 1998.
  • The Kings owe $77 million to the City of Sacramento, with the debt secured by Sleep Train Pavilion and the surrounding land.
  • The Kings also owe anywhere from $125 million to $217 million to the NBA as part of loans from the league’s $2.3 billion credit facility. The number is fuzzy because the debt limit for an individual team is supposed to be only $125 million, but the team may have been granted a discretionary exception to exceed the limit by Commissioner David Stern.
  • A relocation fee of at least $30 million will be assessed to the new ownership group.
  • There is no additional territorial compensation cost because there’s no team currently in Seattle. Compensation cost to both the Lakers and Clippers helped sink the Kings-to-Anaheim plan.
  • The reborn SuperSonics would play at KeyArena for two full seasons before moving across town to a new arena in SoDo (near Safeco Field and CenturyLink Field).
  • Environmental studies for the new arena only started two months ago. From now, that leaves less than 33 months to finish all studies and prep work, acquire all necessary land, and build the arena.
  • The new arena will cost $500 million. $200 million will come from public financing to be repaid by revenues from the arena itself. The rest would come from the ownership group.

Got that? Now let’s do a deeper dive.

First, let’s talk about the debt situation. There are two kinds of debt here, the $77 million owed to the City and the ~$200 million owed to the league. The latter debt figure is high, but as is often the case with sports franchises, not unusual. It’s common for debt to be carried and transferred as part of a franchise sale. There are tax advantages to doing this, and given historically low interest rates, it make less sense to buy cash than it is to carry debt and invest one’s cash elsewhere. However, such debt helps inflate the franchise sale price and eats into proceeds for the Maloofs. The $77 million piece consists of a $64 million loan and $14 million exit fee. The loan was part of a purchase-leaseback deal of then-ARCO Arena. The Maloofs did the deal to offload an asset that that had little potential (more on that later). By the terms of the deal, the Kings’ ownership group would have to buy the arena back from the city if the team were relocated. If the team were to default on this debt, the City would assume ownership of Sleep Train Pavilion and sell it on the open market. They’d also go after the Maloofs if there was a shortfall. That’s a big reason why the Maloofs want to get as much as possible. They’d like to escape Sacramento clean and with enough cash to focus on their post-NBA lives, which would be hard to do if Sacramento sued the Maloof family and got a judge to freeze assets. There’s a possibility that a bankruptcy situation could develop, but that’s far more likely with the Maloofs keeping the team instead of selling the team because the family was running very low on cash on a year-to-year basis.

The Game’s Ric Bucher claims that the Maloofs want to get back into the liquor distribution game that they abandoned to keep the Palms casino and the Kings afloat. To do that, they’ll need to clear even more money from the sale of the Kings. Which might explain the tweet from CBS Sacramento’s Steve Large that said that the Maloofs balked at the (presumed) $500 million offer. Removing the two debt obligations, the family would get a pre-tax haul of $225 million, a good amount but not the kind of windfall many team owners have been seeing recently (Chris Cohan, Frank McCourt).

Tweets from Yahoo! Sports’ Adrian Wojnarowski appeared in the 10 AM hour. Seattle Mayor Mike McGinn held an unrelated press conference at noon where he was asked about the Kings/Sonics and was coy about the whole affair. That was followed by Sacramento Mayor Kevin Johnson holding a presser at 3:30 PM, which was staged to directly address the situation. The big takeaway from the event was that now that KJ officially knows that the team is for sale, he will work hard to get a competing group together that could bid on the Kings.

Already, the name Ron Burkle has come up. Burkle, the billionaire former supermarket magnate, could be a well-heeled backer for the cause. After partnering with Penguins great Mario Lemieux to buy the hockey club in 1999, they steadfastly tried to work the public financing/threaten-to-leave model until the economy collapsed, then got $47 million from Pennsylvania to help fund $321 million Consol Energy Center. Bonds for the arena’s financing were raised by a quasi-governmental arena authority, making the deal similar in structure to the 49ers’ Santa Clara Stadium or HP Pavilion in San Jose. In 2010, Burkle and Lemieux quietly met with Pirates owner Bob Nutting in an effort to buy the struggling baseball team. Nothing came of the talks. Burkle could get involved now at KJ’s behest, but why? Unless Burkle has an overarching sense of charity towards Sacramento, it would be a hard sell for him to play, mostly because he’d be entering (or creating) a bidding war. Burkle didn’t get to $3.2 billion by not driving a hard bargain. His name has been associated with the Kings as a potential buyer for at least two years, and he can’t be pleased with the inflation seen among pro sports properties, or the debt being carried by the Maloofs. Like Larry Ellison, he probably isn’t desperate enough to overpay for the Kings, as the Seattle group appears to be.

One player who has been silent since the news broke this morning is former Kings/Warriors star Chris Webber. C-Webb put together a group of investors in 2011 that included Filipino billionaire Manny “MVP” Pangilinan. There may be renewed interest in getting the band back together. Pangilinan scared the bejeezus out of the Philippine government last fall by threatening to repatriate elsewhere. Perhaps it’s time to resurrect the EB-5 plan.

That plan could come in handy if FEMA lifts the ban on development in the Natomas area where Sleep Train Pavilion is located. Instituted in 2008 after Hurricane Katrina forced changes to levee and floodplain planning, the ban allows for no new development in Natomas and even severely restricts rebuilds of existing properties, including a potential on-site replacement for the arena. Whether an owner that kept the Kings in Sacramento preferred the Natomas site or used the site for redevelopment purposes to help fund a Railyards arena, the inability to do anything with the land cripples any ownership group that owns the property while the ban is in effect. The ban could be lifted even as work to shore up the levees remains incomplete. The task of lifting the ban falls on Congress via legislation, and well, it’s Congress. Don’t hold your breath on that one.

It would not be surprising if the final sale price of the Kings rose above $550 million. The Maloof family has the asset and it’s a seller’s market, so they can play hardball for the next few weeks and allow a real bidding war to happen. Even if a white knight group promised to match whatever the Seattle group offered, the Maloofs aren’t obligated to accept such a bid. If Hansen felt that the Maloofs were trying to rip him off, he might not budge past a certain amount. We’ll see how long it takes to complete the deal. As Kings play-by-play man Grant Napear admitted during his radio show on Wednesday, the franchise is a free agent. With free agents, hometown discounts are the exception, not the rule.

01.09.13
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Did anything happen at the owners’ meetings? January 2013 edition

Probably not. We’ll find out over the next couple of days, as the meetings kick off Wednesday. This quarter’s meetings are being held in Paradise Valley, AZ.

Absent any real news, here’s a musical interlude while you have your inevitable Hall of Fame water cooler discussion.

01.07.13
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Comparison of current (2013) CBAs

A few years ago I did a comparison of CBAs. Now that the NHL deal framework is in place, it’s time to update the table. Here’s what we have now.

MLB remains the only major pro sports league in the US/Canada that has no salary cap.

MLB remains the only major pro sports league in the US/Canada that has no salary cap. NHL cap and NBA salary floor figures are for 2013-14 season.

The untold story is league debt. The NFL is far and away the richest league, but it also has a massive amount of debt. In 2008 that figure was $9.5 billion and has only grown with the expensive new stadia in New Jersey, Arlington, and Santa Clara. MLB’s credit facility, which is meant as a short-term solution for teams, had $1 billion going into this summer and issued $300 million more since then. None of the leagues are in jeopardy because of their respective debt positions because in most cases, that debt is backed by long term TV deals. Individual teams are at greater risk due to the lack of revenue stability in weaker markets, which is frequently the case in the NHL.

Luxury tax structures implemented in MLB and the NBA have worked to reign in many free-spending teams. The NY Knicks are under the NBA’s luxury tax threshold for the first time in recent memory, and the Yankees are set to follow suit in baseball.

All of this goes to show that for all of the talk of economic parity in pro sports, there are instances of haves and have-nots everywhere. It’s unavoidable, and thanks to CBAs that will run for as long as a decade, it’s enshrined. Cheers!

01.06.13
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NHL and NHLPA reach tentative deal to end lockout (Updated)

Update 12:30 PM – Major deal points from TSN and the NY Times:

  • The revenue share split is 50-50 of HRR (hockey related revenue)
  • While the salary cap remains at $64.3 million, the salary floor is $44 million.
  • An NBA-style amnesty provision has been inserted into the CBA to allow teams to drop salaries to get under the cap. Each team has two amnesty buyouts it can use to cut high salaries.
  • To keep teams from structuring deals that would circumvent the cap, no single player contract can have a year-to-year raise of more than 35%, and the highest salaried year can be no more than 50% above the lowest salaried year.
  • Revenue sharing from rich to poor teams will grow to $200 million. (I assume this is annual.)
  • The 50-game schedule would start January 15. The 48-game schedule would commence January 19.
  • Specifics regarding pro participation in the 2014 Winter Olympics in Sochi, Russia remain missing. Those are to be determined after the CBA is ratified. (My guess – owners will be very restrictive about allowing their players to go, perhaps not even allowing for a season carveout to accommodate the Games.)

Both sides heavily credited federal mediator Scott Beckenbaugh for pulling both sides away from the abyss. Until he guided the negotiations, talks were so acrimonious that it was common for one side to accuse the other of trying to screw them over or hide something whenever a deal point was brought up. It’s much akin to the recent federal fiscal cliff debate, which required both sides to come off hardline stances and let some level of common sense reign. Like the fiscal cliff talks, the actual deal came weeks, if not months later than it should have. Too bad that the people who really paid the price for the lockout are the fans. The hardcore fans will come back, somewhat begrudgingly. Will the casual fan?

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At 5:09 AM EST, reports started to emerge out of New York that a tentative deal to end the 113-day NHL lockout had been reached. It’s not a done deal yet as there are still issues to work out, but apparently the major deal points have been agreed upon. Here’s what we know so far:

  • The CBA will run 10 years, with either side able to opt out in year 8.
  • 2013 schedule will have 48-50 regular season games, all in-conference.
  • Season will start January 19.
  • Individual player contracts are limited to 7 years, 8 for re-signed players.
  • The initial salary cap for each team will be $64.3 million.

That last point is interesting, because that’s the same figure as the 2011-12 cap. That’s a pretty big concession on the players’ part. It’s not clear yet the revenue share percentages will be. Last summer, NHL commissioner Gary Bettman projected the cap to be $70 million or higher. During the most recent negotiations, the league was not budging from a $60 million cap.

If the NBA’s post-lockout schedule is any indicator, the upcoming 48-game schedule is going to be brutal. Expect lots of back-to-back games, maybe even some back-to-back-to-back scheduling. Starting on January 19, it’s extremely unlikely that 48 games can be fit into the remaining 12 weeks of the regular season (4 games a week!). Instead, the regular season should be extended 2 weeks to accommodate more rest, with the potential for a compressed or extended Stanley Cup Playoffs schedule on the back end.

This session was, like other fruitless sessions during the fall, handled by a federal mediator. It is unclear exactly how much influence mediator Scott Beckenbaugh had on the process as opposed to the desperation of the two sides, but Bettman made sure to thank Beckenbaugh during his press briefing after the 16-hour marathon session was over.

We’ll dig into the specifics later in the morning.