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Prospective lease agreement between Kings, city of Anaheim released

Mar 26, 2011, 3:00 PM EDT

Gavin Maloof's Exclusive Housewarming Party Getty Images

There’s a deal on the table to kill professional basketball in Sacramento.

Anaheim city officials Friday released an unsigned lease proposal between the city and the Sacramento Kings involving owners the Maloof brothers, and Honda Center operator Henry Samueli. From SBNation.com:

The centerpiece of the agreement is an upfront $50 million loan to the Maloofs, who own the Kings franchise. The loan would actually be made by Samueli, but paid for immediately by bonds issued by the city of Anaheim. Samueli would be on the hook to repay bondholders, and the lease agreement includes a process for the Maloofs to pay Samueli back. A city staff report recommending approval of the bond issuance says that taxpayers would not be put at risk.

The bond issuance also includes $25 million for Honda Center renovations, including a practice facility and locker rooms. The Maloofs are expected to face hefty relocation fees due to encroachment on the Lakers’ and Clippers’ Los Angeles market. The Maloofs also have an outstanding $70 million loan from the city of Sacramento to pay immediately upon relocation.

via Potential Anaheim Lease For Sacramento Kings Released; Centerpiece Is $50 Million Loan – SBNation.com.

The details of this arrangement make it clear that the Maloofs aren’t negotiating from a place of strength. They’re taking on further loans, not getting substantial stakes in concessions, parking, etc. and are surrendering leverage to Samueli. Which would make you wonder why this deal is so important for them until you realize how bad things must be in Sacramento financially in order to push the owners into considering this unsigned deal.

Another pivotal part of this agreement is that there’s no risk to Anaheim tax payers. The issuance of bonds to cover the expenses for renovation of the arena means that the city can more easily pass the agreement through the city council who won’t be on the hook for a tax increase. Granted, there will still be concerns from citizens considering the dire circumstances of the city’s finances, but when has that ever stopped a government body from doing something impulsive?

  1. SmackSaw - Mar 26, 2011 at 4:57 PM

    Who is a good player on the Kings? I want to get a Royals jersey.

  2. purdueman - Mar 26, 2011 at 5:31 PM

    I live within easy driving distance of the Anaheim Honda Center and don’t bother attending either Clipper or Lakers home games in downtown LA, because the traffic is usually a nightmare and you just can’t get there from here. Consequently Orange County will welcome getting their own NBA team… even a crappy one.

    As for Sacramento? Shame on them! It was clear from what happened in Seattle that when NBA owners publicly declare that an old, aging arena is simply no longer competitive or economically viable, it’s not the fault of the owners when the city fails to do anything and they are forces to move. Next pro franchise to relocate? The San Diego Chargers to LA with exactly the same scenario playing out.

  3. zooguitar - Mar 28, 2011 at 12:15 AM

    Um, why is it NOT the owners’ responsibility to fix their own house? Do you work for the Maloofs? Because no one in their right mind thinks the Maloofs are entitled to any arena that they can’t afford on their own.

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