Kings, Virginia Beach Discussing Plan To Relocate Franchise, According To Report

Though Kings’ owner Joe Maloof has denied plans to move to Virginia Beach, the team was specifically named as the anchor of an official proposal for an arena in the Oceanfront section of the city. That proposal is still being evaluated by the Virginia Economic Development Partnership, something cited by the Governor’s spokesman in explaining the lack of funds. “Any state involvement in economic development proposals must make clear and sound financial sense for the Commonwealth’s taxpayers and be economically justifiable,” said the spokesman.

The Kings reportedly began looking outside of Sacramento when a deal for a new arena fell through earlier this year. Virginia Beach emereged as the front-runner for relocation, but they’re far from the only city courting the NBA. As another disappointing Kings season begins to unfold, fans will have to continue to watch relocation drama develop.

The Maloofs reportedly pulled out of a deal that would have included $255 million in public money toward a $400 million new arena over pre-development costs, game-day obligations, and the length of their lease. Unsurprisingly, that has peeved some owners.

A local coalition of Sacramento leaders is looking into the possibility of proposing an alternative ownership group to the NBA.

What Johnson had to say was pretty brutal:

Here’s the entirety of Johnson’s statement, as tweeted by Berger:

“We had an agreement in principle, a framework, a deal. Call whatever you want,” Stern said in a press conference following the Board of Governors meeting. “In my view, it was subject to any party who said didn’t want to do it. It was always non-binding.”

“I think it’s fair for Maloofs to say they didn’t want to do it,” Stern said, adding that “If they did it a little earlier, a little simpler and a little more directly, it could have saved some angst.”

“If [Mayor Kevin Johnson] says he’s not negotiating, then he killed the deal,” Maloof said. “It’s over.”

Johnson, in a sternly-worded letter that was leaked, informed the Maloof family that the city had no interest in adjusting the terms of a handshake deal approved by all parties six weeks ago. The Maloof family is objecting to several aspects of that deal, including the call to provide $3.2 million in pre-development fees towards the new arena.

That deal was brokered in all-hands negotiations in Orlando during All-Star Weekend.

“Under no circumstances will the City make material adjustments to the current terms of the deal,” Johnson said in the letter. “Put simply, we have done our part.”

Via @TonyBizjak:

Bizjak reports that the meeting is currently set to take place at the popular and infamous “undisclosed location.” Both sides announced a deal less than two months ago during the NBA’s All-Star break, but now the Maloofs want to renegotiate and are questioning the city’s ability to build a new arena by 2015.

The deal announced at the end of All-Star Weekend in Orlando was a handshake deal on a term sheet. The city has claimed that the Maloofs didn’t raise hackles about anything in the deal until March 20, almost a month after agreeing to the term sheet and three weeks after the Sacramento City Council approved it.

The Bee quotes experts who believe Stern will be unwilling to re-open talks, and may be affronted at the Maloofs’ intransigence. Stern and the NBA took over the arena issue on behalf of the Maloofs in 2006 primarily because the owners’ reputation had become so toxic in Sacramento. The path is familiar.

How critical are things right now? On Wednesday, David Stern had this to say when speaking to reporters in Salt Lake City (from Brian Smith of the Salt Lake City Tribune):

By no means is a deal dead, and this doesn’t mean the Kings will shuttle off to wherever. But this is a critical phase for the team, and it all falls into the lap of the Maloofs.

Just a year ago, the Maloof family, owners of the Kings, appeared ready to move the club to Anaheim, even going so far as to put together a lease agreement to play in the Honda Center. But Kevin Johnson, Sacramento’s mayor and a former All-Star point guard, convinced NBA commissioner David Stern to hear his city’s case. After several extensions on the Maloofs’ deadline to file for relocation while the league office and relocation committee investigated Sacramento’s potential and blueprint for a new facility, the team announced it would remain in Sacramento for the 2011-12 season, assuming that a lockout didn’t kill it.

The city announced a deal with the Kings and the NBA last week, and presented that agreement to the City Council for approval. On Tuesday, the council voted 7-2 in favor.

If it receives five or more votes, the city would proceed on finalizing specific elements, including either a lease of publicly-owned parking facilities or the creation of a public parking authority that would then borrow against future expected parking revenues to help fund the construction of a new arena.

If approved, the arena is on track to open for the 2015-16 season. The Kings would commit to Sacramento for 30 years. They have been in town since 1985, with the Maloof family taking over ownership in 1999.

KJ doesn’t drink, but he should never have to buy another Pellegrino in this town again.

The Maloofs, who own the Kings, would be kicking in about $73 million of the total of $387 million. The involved parties were sounding as if this was all essentially a done deal and that city council approval was more of a formality (via Sacramento Bee).

This has to be seen as a massive step forward as the Kings have, seemingly, had at least one foot out the door for quite some time. In recent weeks, that has heated up as Seattle announced its own plans to build a new arena in an attempt to lure an NBA and NHL team to town. It had been widely speculated that the Kings and Phoenix Coyotes were the most likely teams to make the move.

The deal would reportedly ask the Maloofs for $85 million up front, with $15 million of that being freed up in a refinancing of an existing city loan to the family, $25 million coming from the sale of land around the Kings’ current arena, Power Balance Pavilion, and the rest constituting advance lease payments. At least one brother, George Maloof, who runs The Palms in Las Vegas -- a casino the Maloofs built but recently lost controlling interest of due to massive debt obligations -- is unconvinced the deal is a good one.

For more on the Kings’ arena situation, visit Sactown Royalty and SB Nation Bay Area.

Stern said that gaps still exist, and the March 1 deadline for a deal remains. The Sacramento City Council is expected to vote on a potential deal March 6.

Earlier on Saturday, multiple reports cited sources who said the city of Sacramento is seeking a contribution from $70-$90 million from the Maloofs. The family losts the majority of its stake in The Palms Casino and Resort last year due to reported debts in the hundreds of millions. The Maloofs have also shuttered the WNBA Monarchs and sold the family’s lucrative New Mexican beer distributorship in recent years to get some liquidity. Joe and Gavin Maloof infamously switched from first-class to coach travel in the painful 2008-09 season. It is unclear whether they have returned to the luxury of the front of the plane.

No public vote is expected to be necessary.

Johnson said Wednesday that he aims to have a deal with the league in place by March 1 so that the city can give the public and the Council ample time to review the details. Johnson will be in Orlando for All-Star Weekend to negotiate directly with NBA commissioner David Stern and the Maloofs, who own the Kings and last year attempted to move the club to Anaheim. Stern blocked that attempt, more or less.

NBA Commissioner David Stern recently did an interview with TNT’s David Aldridge, saying that the team will contribute heavily as they attempt to pay the $387 million needed for a new arena. The city is reported to have asked for about $85 million, according to a report from the Sacramento Bee, but Stern wouldn’t disclose any precise numbers.

He did say they might be getting creative to help with their portion of financing for the arena, though.

The Maloofs already owe the city roughly $70 million for a loan executed in the late 1990s when the Kings had threatened to leave Sacramento under previous ownership. The Maloofs are also believed to owe at least $100 million to the league’s credit facility. For the second consecutive season, the Kings have the NBA’s smallest payroll. Sacramento barely exceeded the league’s minimum payroll level last year.

The city is working with arena developer AEG and the NBA on a term sheet that would be presented to the Sacramento City Council on Feb. 28, two days before the league’s March 1 relocation deadline. That term sheet will include a large chunk of the capital coming from the leasing out of the city’s downtown parking facilities to a private contractor, an issue that has met with some controversy in Sacramento. That piece of the deal is expected to contribute roughly half of the capital needed to build the $400 million arena at The Railyards, Sacramento’s massive infill space just off of downtown.

The Maloofs have not been in New York City participating in NBA lockout talks, and have not attended any public meetings at which the arena was discussed in Sacramento. Gavin Maloof, the more well-known member of the family, was in Sacramento for much of June as the Kings prepared for the 2011 NBA Draft.

The city has until March 1, 2012, to put an arena plan in place; otherwise, the Maloofs have indicated that the NBA will approve a relocation application.

AEG getting involved would be a huge deal. AEG recently helped Kansas City build the Sprint Center without a major league tenant; a Sacramento arena would be similar since the city has just one major league team and no major college programs. AEG has also developed the Staples Center and L.A. Live and is the lead on a new NFL stadium in Los Angeles.

Sacramento has until March 1, 2012, to have an arena plan in place. The Maloof family, which owns the Kings, has made it clear that if an arena plan is not set in stone, the team will file for relocation. The NBA, which has staff stationed in Sacramento to help the team and city this year, has indicated it will grant the Maloofs’ request if it comes to that. That supposes, however, that the struggling Maloofs are able to hang on to the franchise.

Stern said an outpouring of support and forward movement in Sacramento over the past few months convinced the NBA the city was worth one more shot.

“If it turns out that we’re wrong, we’re wrong,” he said.

The Sacramento Kings won new life on Monday, as the Maloof family, owners of the franchise for the past decade, announced that the team would stay put in California’s capital for the 2011-12 NBA season. The Maloofs had been pursuing a relocation to Anaheim, but Sacramento drummed up new financial support for the team, and the NBA --possibly at the behest of Los Angeles Lakers owner Jerry Buss -- told the franchise that support for a move would be hard to come by.

In the Maloofs’ statement confirming the new, the family made a point to emphasize that this is a temporary concession, that if the city of Sacramento -- a city coming off the worst economic downturn since the Great Depression, hit particularly hard by the housing bust and the associated disapperance of construction jobs and with a deficit in the millions -- doesn’t come up with an arena in the next year, the NBA will support a Kings relocation.

But Sacramento fought for the Kings, with Mayor Kevin Johnson, a former All-NBA guard, drumming up $10 million in new corporate sponsorships to convince the league to give the city another chance. The mayor now waits for a feasibility study on a downtown arena, due in late May.

In the Maloofs’ statement, the ball is put in Johnson’s court to come up with an arena plan.

The NBA and Maloofs are expected to release statements on the decision on Monday. The Maloofs had become disenchanted with attempts to get a new arena built in Sacramento, and in February NBA commissioner David Stern told media the team was in discussions with Henry Samueli, owner of the Anaheim Ducks and operator of the Honda Center. Despite a major push from Sacramento mayor Kevin Johnson to scrape together $10 million in new corporate sponsorships, the Maloofs continued to consider Anaheim, until the NBA’s relocation committee told them it would not recommend the NBA Board of Governors approve a move.

Visit Sactown Royalty for more on the decision and what happens next.

If the Maloofs do decide to file, they still must receive majority approval from the NBA Board of Governors. That could be a problem, as the seven-member relocation panel has already told NBA commissioner David Stern and the Maloofs that they will not recommend approval of a relocation application. Reports have suggested the Maloofs could sue on antitrust violation charges if the other NBA owners blocked a move.

To that effect, a Maloof-hired lawyer visited the house of an Orange County Register last week, requesting a tape of Phil Jackson’s comments in which he compared the Maloofs to Frank McCourt, the embattled owner of the Los Angeles Dodgers. The saga could drag in, though the Maloofs risk damaging their reputation in Secaucus enough that Stern could push for the family to sell to billionaire Ron Burkle, who has said publicly he’s interested in buying the Kings and keeping them in Sacramento.