The city of Sacramento Saturday unveiled a key piece of its efforts to keep the Kings from relocating to Seattle, announcing it has reached an agreement on a $448 million deal to build a new arena.
The deal must still be approved by the Sacramento City Council on Tuesday, though initial reports indicate that is expected to happen.
Sacramento mayor Kevin Johnson announced the deal with a private investment group in a series of tweets Saturday afternoon.
Johnson, a 12-year NBA veteran, has led the city’s efforts to keep the Kings since it was announced in January that the team had been sold by the current owners, the Maloof family, to a group from Seattle led by Chris Hansen. That sale, however, must be approved by the NBA Board of Governors when it meets in New York April 18-19.
Johnson has assembled an ownership group that is making a counteroffer on the team and will also lead the charge on the arena.
The Sacramento Bee reported that the arena will be financed by $258 million in city funds. The Bee reported $212 million of that will come from borrowing against downtown parking revenue and the other $46 million from selling city land. The other $190 million will come from the ownership group led by Ron Burkle, a billionaire who also is a co-owner of the Pittsburg Penguins; Mark Mastrov, founder of 24 Hour Fitness; and Vivek Ranavide, a co-owner of the Golden State Warriors.
The presence of Ranavide, also a Silicon Valley entrepreneur, was revealed last week and it is thought he will help bolster the team’s offer to buy the team. An initial offer was described by NBA commissioner David Stern as not comparable to that made by the Seattle group and that “unless it increases, it doesn’t get to the state of consideration.”
Hansen’s group reportedly paid $341 million to buy 65 percent of the team at a valuation of $525 million.
Johnson hinted that the Sacramento offer will increase substantially when he Tweeted that “the new ownership, historic in its reflection of our city’s diversity, will invest up to $1B (billion) in (Sacramento).” It is thought that the Seattle group may also have the ability to increase its offer.
Johnson also Tweeted that the ownership group would agree to keep the team in Sacramento for 35 years. Sacramento news outlets also reported that the ownership group would pay for $6.5 million in pre-development costs. That had been a sticking point in a deal that the city had tentatively reached with the Maloofs last year. The Maloofs later backed out of that deal, leading to their eventual decision to sell the team to the Hansen group.
The Bee reported that the Sacramento arena deal, which initially had been scheduled to be revealed on Thursday, came together in a series of calls between the city and Burkle on Friday and Saturday.
The city needed to get an arena deal completed before a critical April 3 meeting with NBA owners in New York. Representatives of the Sacramento and Seattle groups will state the case for their offers and arena deals at that meeting. The full board will then vote later in the month. The hope in Sacramento is its offer will be enough to compel the NBA to not approve the sale of the Kings to the Hansen group, forcing a sale to the Sacramento group.
Seattle and Hansen assembled a deal for a new $490 million arena in the Sodo district last fall. That price tag includes $200 million in public bonds that would be repaid with taxes and rents generated by the arena.
Construction would not begin until an NBA team is secured. If the Kings came to Seattle, they would play at KeyArena beginning next season for at least two years while the arena is constructed.
Hansen and the Seattle group have not commented on events out of Sacramento since the sale with the Maloofs was announced, sticking to an NBA media gag order, and had no comment Saturday.