May 14, 2013, 8:00 AM EDT
It has been said throughout the Sacramento Kings saga that the presence of Microsoft CEO Steve Ballmer in Seattle’s ownership team has been a big plus as they seek to buy and relocate the team.
Worth $15 billion according to Forbes and ranked No. 51 on its billionaire list, he and Chris Hansen were called the “perfect prototype for an NBA owner” by David Stern shortly after the NBA relocation committee unanimously recommended to reject a move of the Kings to Seattle.
But now that Seattle’s advances have been rebuffed by the NBA, sources say it’s Ballmer that has taken on a larger role in decision-making for the Seattle ownership group. The polar opposite of the soft-spoken hedge fund manager in Hansen – Ballmer is known for being loud and outrageous. Vanity Fair ran a seething piece (Microsoft’s Lost Decade) last August detailing a violent incident and more.
Now that Ballmer has taken on a larger role with the Seattle group, league sources tell PBT that the same bravado he has employed with Microsoft is turning heads at the league office – and not in a good way. It’s no secret that Ballmer is a handful — but a well-connected and filthy rich handful that the NBA would love to have in its stable. At least that was the case. According to league sources speaking to PBT under condition of anonymity, the recent power plays made by Seattle and the Maloof family have “started to weigh on the NBA to the point where any Ballmer-led proposal now or in the future could fall on deaf ears if he doesn’t change course.”
When asked to clarify, the source said that should the Seattle group continue to pursue a scorched earth policy with the Sacramento marketplace, they would jeopardize the city’s ability to secure an NBA team down the road should an opportunity present itself.
When asked how Seattle got to that point, several sources with knowledge of the situation have told PBT that once they recognized the Sacramento bid was likely to meet league requirements, and ultimately secure the Kings, then decision-making for Seattle’s strategy and PR effort slowly shifted into Ballmer’s hands. That strategy has been at odds with the due process the NBA has been following, and recently it has been at odds with the NBA itself.
“He’s on a rampage,” said one source. “He assumed he could backdoor Sacramento with a willing partner in the Maloofs, but he underestimated Sacramento and now he thinks he can twist enough arms around the league to force his way into the association.”
As reported by multiple outlets, the Hansen-Ballmer group has chosen a curious route to team ownership by working primarily with the Maloof family and often with little-to-no communication with the league office. Conversely, the Sacramento group has worked directly with the league and had very little communication with the Maloof family, who have not ruled out selling to the Sacramento group but also have done everything possible to repel it.
Leading up to the NBA’s recommendation to deny relocation of the Kings to Seattle, the Seattle-Maloof group saw their first shift in public relations strategy. Leaks attacking the NBA, David Stern and the Sacramento group had been occurring with greater frequency, but the first shot across the bow at the NBA occurred when they ignored the league’s public and private statements and tried to force a bidding war.
They “voluntarily” raised their offer to buy the team by $16 million for a total of $357 million. This development was not seen as pivotal by the league, and the Sacramento group didn’t as much as blink when they stood pat with their originally matched offer of $341 million for the Maloof-controlled 65 percent stake.
The core of the Seattle-Maloof strategy was two-fold. First, they would seek to sell owners on the idea of a higher franchise valuation – a nebulous concept given the many intangibles of such measurements. Does an equal offer in both cities create better comps for owners if it’s accepted in a smaller market? Do the next purchasing owners even include this aberration of a situation in their valuations? Regardless of the merits of the strategy, throwing money at the issue has always been the Ballmer way.
The second and more important factor in increasing the bid, sources say, is that it raised the idea of a Maloof antitrust challenge should the family not be allowed by the NBA to sell to the highest bidder. League sources say that the NBA has planned for this contingency, and while the potential litigation would always play a role in their decision-making, the ammunition the league would have against the Maloof family in court has made this a mostly benign threat.
NBA.com’s David Aldridge reported this past week that Hansen is not interested in any legal challenges if his bid is rejected (no word on Ballmer). Nevertheless, the threat of a lawsuit would never come from a Seattle group that hopes to one day join the NBA. The antitrust threat, benign or not, starts with the Seattle group’s offer and draws a Family Circus style map for the Maloofs to posture with. Nothing more, nothing less.
In coordination with this threat, the Maloofs have made constant overtures that the league cannot force them to sell or tell them what to do. When asked about what the league would do if the Maloofs try to act against the league’s wishes, sources say the NBA has always reserved the right to use the ‘Best Interest of the League’ clause to remove the family from the league. Sources say this outcome is unlikely, however, because there is enough “natural leverage” to manage the situation without using it.
For one, the Maloofs cannot afford to run the Kings under normal conditions, let alone with an empty arena and no sponsors – something we’re told would not be held against the Sacramento market if the impossible scenario of them keeping the team came into play. The family is also indebted to the league to the tune of an estimated $150 million, and the family has done plenty of damage to the league’s reputation on the public subsidy front and in general.
“There are no shortage of claims to be made against the Maloofs should they stumble their way into court,” said a source speaking to PBT under conditions of anonymity.
Back in reality-land, Hansen’s announcement that he would “voluntarily” increase his bid was uncomfortable for the league, but because they had not gone public with a recommendation the strategy wasn’t seen as an affront to the league’s due process.
Any doubt about Seattle’s contempt for that process would eventually be erased once the league’s relocation committee unanimously recommended against a move to Seattle. Sources say it was at that point that Ballmer officially took control over the war room.
Immediately after the league’s announcement, an aggressive statement was put out by Hansen on the SonicsArena.com website stating that despite the NBA’s recommendation, they “fully committed to seeing (the) transaction through.”
“It was at that point that Ballmer put the league on notice,” said one league source. “Knowing that he could offer virtually anything with a decision on the Kings’ future all-but made, Ballmer has been dead-set on embarrassing the league by making them turn down a much higher offer.”
This past weekend the Seattle-Maloof group leaked news of an increased $406 million offer for the Maloof-controlled 65 percent stake of the team. They also leaked news that the Maloof family would not sell to the Sacramento group.
Lastly, they leaked a scenario in which 20 percent of the team would be sold to Hansen and Ballmer as a ‘backup’ bid in case their original bid for a majority stake was denied. The Seattle-Maloof group would supposedly work with the city of Sacramento on an arena deal in this impossible scenario – one that has drawn a collective eye-roll around the league. Sources with knowledge of the league’s thinking have called that scenario a “non-starter.”
In shades of past Maloofishness, the Sacramento Bee reported today that the family is still willing to consider the Sacramento offer. Whatever the case may be, league sources have consistently told PBT that not only do the Maloofs have practically no leverage in this situation, but they also have practically no chance of being NBA owners next season. Sources expect the family to accept Vivek Ranadive’s bid after the Seattle relocation bid is denied, perhaps as soon as Wednesday.
With the NBA expected to eventually stand behind the Sacramento group, the larger issue being discussed in league circles is whether or not Ballmer and Seattle will follow the Maloofs off the NBA’s ledge. Their sneak attack attempt to procure Sacramento’s team was never well-received by the league, who would have rather seen the Maloofs conduct a good faith effort to sell the team locally. Even with Seattle holding Sacramento’s feet to the fire at every turn, sources say that there was never a point in time in which insiders thought Seattle had gone too far. After all, taking a team from a market that has done everything it needed to in order to keep the Kings is messy business.
Despite an all-out assault by Seattle to create an air of inevitability surrounding the relocation of the team, including reports that the NBA would quickly and overwhelmingly approve the move, and near daily leaks from Seattle-Maloof sources about make-believe problems with the Sacramento bid – the feeling around the league was that though the situation has been undesirable, once the ball was thrown in the air, all was fair in a basketball war.
As for Seattle, the strength of their ownership group, their oversold but actionable arena plan, and strong No. 12 TV market made them a shoo-in if the Sacramento group faltered. As we know now, Sacramento did not falter, but Seattle was certainly well-positioned for the future.
“(Seattle) was in the driver’s seat when it came to potential opportunities with the Bucks or whatever team might face arena or market troubles down the road,” said one league source. “If the league was going to consider expansion, you could have written Seattle’s name in ink to get a team.”
Now that Ballmer is leading Seattle down the path of conflict with the NBA, sources aren’t so sure.
“You don’t get into a knife fight with the NBA and then ask if you can come hang out in the clubhouse,” said one high-level source. “Ballmer is playing a game of Russian Roulette with SEA’s NBA future. He can’t throw money at the problem like this is Microsoft.”
Perhaps this is an unsolvable problem for the Seattle group – a zero-sum game and all participants have nothing to lose by going all-in. Perhaps they know that expansion is off the table.
With the way the local media has demonized David Stern and the NBA the average fan in Seattle is being told that they’re being screwed if Stern doesn’t rob Peter to pay Paul. Perhaps the Hansen-Ballmer group believes that the only thing that can satisfy the masses is the Sacramento Kings, or an iron-clad promise of expansion down the road. If you listen to the most strident voices in Seattle, they believe it’s time to spill blood in one gigantic last stand.
Sources say these realities are understood by the league, as is playing hard through the final whistle. “The league is more than willing to support Seattle in its bid for NBA basketball, but when they choose to trash an existing, supportive market in Sacramento and then set their sights on the logo, all bets are off.”
The NBA’s Board of Governors conducted a conference call on Monday and no changes were made to the relocation committee’s recommendation. The owners will see presentations by both groups on Wednesday with Jon Humbert of KOMO in Seattle reporting that a full vote will indeed take place.
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