On Wednesday, NBA owners will meet in Dallas to decide the fate of the Sacramento Kings. The choice right now appears to be whether the team will be sold to a group led by software mogul Vivek Ranadive and move into a new $447 million arena in downtown Sacramento or sold to a group led by hedge fund manager Chris Hansen and Microsoft (MSFT) Chief Executive Officer Steve Ballmer and move into a new $490 million arena south of downtown Seattle. Those aren’t the only possible outcomes in this protracted tug-of-war.
The owners’ vote is limited to whether or not the Kings will be allowed to move to Seattle. The league cannot force the current owners, the Maloof family, to sell. And the Maloofs are full of surprises. Two years ago, it looked like they were moving the struggling franchise to Anaheim, Calif. In February of last year, they struck an eleventh-hour deal with Sacramento Mayor (and former NBA player) Kevin Johnson to stay put. That fell apart less than two months later. Now the Maloofs are reportedly making plans to freeze out the Ranadive group.
Seattle enters the picture with an even more turbulent history. The city’s NBA team moved to Oklahoma City in 2008 under new ownership that probably never intended to stay in town. Seattle had committed the cardinal sin of failing to offer public money for a new arena. It has learned its lesson and is now promising $200 million if a team comes to town. (Sacramento is offering $258 million.)
The competition between the two cities (and potential owners) involves plenty of complicating factors—from revenue sharing to relocation fees to TV rights deals and the possibility of expansion—but it essentially comes down to a pair of bidding wars: one to ply the Maloofs with cash, and the other, more important battle to make the transaction cheap and attractive to other NBA owners. That means, above all, adhering to an economic model that depends on accessing public funds to generate new revenue.
To get a sense of what owners are thinking as they approach tomorrow’s vote, take a look at this document (PDF) from the 2008 court battle between the city of Seattle and the ownership of the Supersonics (now Thunder) over the team’s lease at Key Arena. It is a presentation from lawyers hired by the city on how to entice a new set of owners to buy the team and save the day.
It offers a frank assessement of ownership perspective.
From the need for taxpayer money (aka “partnership with the local community”):
To the fact that people, especially in the press, love to hate owners:
To an unsentimental accounting of the best markets for sports teams:
To the love for other rich guys (aka “high end customers”):
To the playbook for looking like a “civic-driven” owner:
The whole document is worth a read before you peruse tomorrow’s statements about commitment to the people and fans of city X.