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ESPN article explains big reason why the Kings will stay in Sacramento

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ESPN article explains big reason why the Kings will stay in Sacramento

Ranadive group's revenue stance key

By Brian Windhorst | ESPN.com

NEW YORK -- The would-be new owners of the Sacramento Kings made a crucial and costly concession last week ahead of a relocation vote by NBA owners that may have been a deciding factor in keeping the team from moving to Seattle.

Software billionaire Vivek Ranadive, who hopes to purchase the Kings and complete a deal with local government to build a new arena in Sacramento, agreed to give up potentially tens of millions in revenue sharing from other owners to help sway them to reject the Seattle option, sources told ESPN.com.

The revelation helps explain why owners on the league's relocation committee appeared to pass on what had looked like a better long-term financial situation by moving the team to the larger Seattle market.

Essentially, Ranadive promised to let his potential fellow owners keep money they would otherwise owe to his small-market team each season under the current league rules. It was a shrewd, if quite expensive, card to put on the table as owners were making the challenging decision of what to do with the team.

The Sports Business Journal first reported Ranadive's offer.

This unprecedented component, sources said, was negotiated by the NBA league office as part of what is starting to look like a sweetheart deal for the league that Ranadive and the City of Sacramento ultimately presented. The city has pledged more than $250 million in public funds toward the new arena.

Ranadive's group is willing to pay a record price, $341 million for 65 percent of the team, to make it a total valuation of $525 million. He's also offered to reduce the amount of money the Kings would be scheduled to receive from fellow teams for the next few seasons. Then, once the proposed arena is constructed, Ranadive would phase out getting any revenue-sharing from their follow teams.

A source said Ranadive made the offer after a study projected a strong increase in team revenues once a new arena is opened.

The relocation committee's decision last week, which will be voted on and likely approved by the full body of the league's owners at a meeting next week, stunned the Seattle group led by investor Chris Hansen. He believed his offer was a better monetary deal for the league, especially because Seattle figured to be a market that would eventually pay into the revenue-sharing system instead of taking out of it as the Kings currently do.

As one of the lowest-grossing teams in the NBA, the Kings stood to be one of the biggest receivers in a new, more expansive revenue-sharing system. They could have received in excess of $20 million per season from richer teams.

Hansen released a statement after the vote saying he wanted to go through with buying the Kings despite the Seattle move likely being rejected. His group has a deal with the current owners, the Maloof family, to buy the team for a slightly higher valuation of $550 million.

No sale can be approved without approval of 75 percent of other owners. If the relocation bid is rejected, owners are expected to clear the sale to Ranadive's group once the Maloof family has agreed to sell the team to that group. Ranadive already put 50 percent of the money into an escrow account last week ahead of the owner's meetings.

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I find it interesting that they could even opt to give up revenue sharing. It seems odd to me because it's likely to cost them more than upping the offer in the long run.


BasketBalAllan
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I think that all along Hansen

I think that all along Hansen was confident in his chances because even if Sac matched the offer there was a large chance it would go to Hansen anyways. Sac had to beat the other offer to get the type of reaction they were looking for, which they did. If you think about it Hansens upped offer was not that impressive, they raised it by less then 5%, that is how sure they probably were that they would get it. This whole opting out of the revenue sharing system has the possibilities to save the other owners much more money in the long run. Its not super hard now to wonder why the recomendation was unanimous, more money in the voters pockets.

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Great news for Sacramento but

Great news for Sacramento but the new Arena would need the team to have an upturn in fortunes to fill it. This season just gone the Kings averaged 13,769 attendance per game against a capacity of 17,317 so did not fill 80% of their capacity. But if you go back to 2001-2007 then the Kings were 100% capacity for virtually every game and so we know the crowds will return.

Also the Kings current Arena no doubt lacks luxury suites and club seats where teams can make a lot of revenue and a new arena would give the Kings an instant income boost there. I would think the Kings would realistically have to look to build a 20,000 capacity arena for their use to try and cater for a return to the play offs and to give them a better revenue stream.

It may take a while to fill it but an improving team would help greatly and the first season at a new Arena will always boost attedances, also they could well get an All Star game as the NBA likes to take these to new venues and this would boost the local economy too.

GottaBeTheShoes
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Please someone give Seattle a

Please someone give Seattle a team. I'm bored here. In all seriousness though, I'm glad Kings fans get to keep their team but Seattle should get whatever team has the lowest attendance rates.

boffacheerios
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Seattle will get a team once

Seattle will get a team once they learn to work WITH the NBA to get a team, not against them. Hansen hinting at anti-trust suits and potentially still attempting to relocate the franchise isn't helping his case or getting him future votes. I think when Seattle gets a team it'll be because of grass roots movements and respected investors because really, who wants their hard earned money going into the pockets of a hedge fund manager? The NBA has made it clear now that it takes more than just money to get in. I love the City of Seattle and I'm sure my bias as a Sacramentan is clear, but we just pulled off a david and goliath-like victory, and if Seattle fans can commit themselves to the same type of positive involvement that Kings fans have done there's no question they deserve a team ASAP.

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