Sacramento Mayor Kevin Johnson announces arena deal with investors
By Ben Golliver
Sacramento Mayor Kevin Johnson announced Saturday that his city has reached a deal with developers to construct a new Downtown Plaza arena to house the Kings, who have been linked to a possible relocation to Seattle.
“I’m pleased to announce an agreement with [the] Burkle-Mastrov-Ranadive group on a public-private partnership to build a new [entertainment and sports complex] at [the] Downtown Plaza Mall,” Johnson wrote on Twitter. “Consistent w/our core tenets, the deal avoids new taxes, protects the City on the Kings loan, and ensures no net impact to the general fund.”
Johnson added that the investment group, which includes 24 Hour Fitness founder Mark Mastrov, billionaire Ron Burkle and TIBCO chairman Vivek Ranadive will “make a 35-year commitment to keep the Sacramento Kings right here where they belong!”
The agreement follows Johnson’s Feb. 28 State of the City address, which named Mastrov as the lead investor in an effort to purchase the Kings and Burkle as the head of the arena development effort. Ranadive, who is a part-owner of the Warriors, emerged this week as additional muscle behind the ongoing efforts to prevent the Kings from relocating to Seattle.
The Sacramento Bee reports additional specifics of the arena deal.
Sacramento Mayor Kevin Johnson has announced the city has reached an agreement on a $448 million deal with a private investment group to build an arena at the Downtown Plaza site. The city will put $258 million in value into the deal, mainly by bonding against its downtown parking garage future revenues, and by selling several downtown parcels to developers. The development team will put $190 million into the deal. That team is made of up investment billionaire Ron Burkle, 24 Hour Fitness founder Mark Mastrov, and Vivek Ranadive, a Silicon Valley entrepreneur.
The preliminary term sheet, agreed upon this afternoon after weeks of negotiations, is non-binding, however. It must be approved by the City Council, a vote that is set for Tuesday night. It is contingent as well on the Maloof family accepting a bid from the investment group to buy the Sacramento Kings.
Back in January, the NBA announced that the Maloof family, who currently own the Kings, reached a purchase and sale agreement with a group of Seattle investors led by Valiant Capital’s Chris Hansen and Microsoft CEO Steve Ballmer for a controlling share of the franchise. The Seattle group then filed the necessary relocation paperwork with the league office in hopes that the Kings would move to Seattle for the 2013-14 season. Johnson and his partners have responded with extensive efforts to keep the Kings in Sacramento.
Two weeks ago, NBA commissioner David Stern told reporters that the Sacramento’s bid for the Kings would need to increase to merit consideration. The Associated Press reported that Stern said that the Sacramento group has “very strong financial people behind it but it is not quite there” compared to the Seattle group. Stern added that there was a “substantial variance” between the two bids, noting that “unless it increases, it doesn’t get to the state of consideration,” and “right now it is fair to say that the offers are not comparable.”
Mastrov told the Sacramento Bee after Stern’s comments that he was not discouraged by Stern’s statements.
“I didn’t hear what the commissioner had to say, but we’re excited about the Kings, we are going to be aggressive,” he said. “We are aiming to win the bid, but it is a long process. We have a long way to go. We are going to continue to work with the NBA.”
The NBA’s Board of Governors will meet in New York City on April 18 and 19 to vote on the sale agreement between the Maloofs and the Seattle-group as well as the application for relocation. Johnson said he will be in attendance at the meetings to make his pitch.
“I’ve been assured by the commissioner of the NBA that we will be given full consideration,” Johnson said.
Stern acknowledged during All-Star Weekend in Houston that the Kings’ saga would leave either Seattle or Sacramento empty-handed.
“I don’t see any scenario in which both cities are happy here,” Stern said, ruling out the possibility of expansion to accommodate both cities’ desire to have a franchise.
Stern also said in Houston that it was “plausible” that a Kings offer could win out over Seattle’s agreement but cautioned against this turning into a bidding war, saying that the owners would have a “very open mind” as they weighed the two offers.
“I don’t believe it’s going to come down to economics,” Stern said of the Board of Governors’ consideration of two possible offers. “I think the owners are going to have a tough issue to decide. … We don’t have the predicate for that tough decision yet. It’s going to wait upon Mayor Johnson making good on his statement that there will be an offer. And it’s going to be upon the Sacramento area, a number of the regional municipalities and the various people who have been saying they’ll give the mayor the support he needs.”
The Seattle-area investment group’s plan is to play in KeyArena until a new stadium can be completed. The franchise would take on the SuperSonics moniker, starting a new chapter after the original team played in Seattle from 1967-68 until 2008, when they were relocated to Oklahoma City and renamed the Thunder. The group’s purchase and sale agreement includes a 65 percent share of the team at a $525 million franchise valuation.
Johnson, Stern and the Maloofs reached an agreement on an arena deal for the Kings in February 2012 only to have the Maloofs back out two months later. In recent years, the Kings have also explored relocating to Anaheim and Virginia Beach. Kings fans recently held a “Here We Buy” in an effort to express their interest in keeping the franchise, which relocated to Sacramento from Kansas City in 1985.