Sacramento’s whale steps away from arena deal; What’s next?



Posted on April 8, 2013 at 10:06 PM

Updated Monday, Apr 8 at 10:47 PM

SEATTLE - The Whale swam in a different direction.

On Monday, Billionaire Ron Burkle decided to reduce his involvement in a planned counter bid to keep the Kings in Sacramento. It was a bit of a surprise given what that city’s Mayor tweeted just two weeks ago.
“With all that said...I'm pumped!! Ron B & I officially closed the deal a few mins ago…” Kevin Johnson wrote on March 23rd, when he announced Sacramento had reached a term sheet for a $447 million dollar arena development in Downtown.  
Burkle, 24-Hour Founder Mark Mastrov, and Golden State Warriors minority owner Vivek Ranadive were described then as the “dream team,” which would fight to keep the Kings in Sacramento.
Seattle Arena investor Chris Hansen and Microsoft CEO Steve Ballmer, along with Pete and Erik Nordstrom, have a signed purchase agreement for the NBA’s Kings, and the franchise has applied to move north to Seattle this fall.
Hansen, and his group, made his formal pitch to a group of league owners last week in New York, and outlined plans for a new arena, and what he believes were economic reasons for the NBA’s return.
Johnson, flanked by Burkle, Mastrov, and Ranadive, followed with another presentation.
But today, Johnson told a group of supporters, and reporters in Sacramento, Burkle would no longer be involved as an equity partner in either the team, or an arena project. He said it was because of a conflict of interest with the league, and he was still interested in ancillary development near an arena site.
NBA League spokesperson Mike Bass said in an official prepared statement, “Ron Burkle is no longer part of the Sacramento group because his ownership interest in Relativity Media - which has a division that represents NBA players - would violate NBA rules."
But unofficially, the Burkle move prompted some people to raise questions about his commitment to the project, and to the counter bid.
The Sacramento City Council has approved a term sheet for the deal, and the league is expected to rule on Hansen’s purchase agreement and relocation request in 10 days.
“I hope Kevin Johnson really comes through on this one and is not just running his mouth, because if he is, he's going to have a lot of disappointed people out here," said Sacramento resident John Ketchum.
A high level NBA league source says Burkle “wasn’t all that fired up about this deal."
Johnson says he still will likely unveil a wrinkle or two in the next few days, leading to the possibility he will try to unveil another big investor to fill Burkle’s shoes.
“It remains to be seen how much money can be made up by Ron Burkle leaving this group,” said Michael McCann, Sports Law Expert and the new Director at the University of New Hampshire’s Law Sports & Entertainment Law Institute.  “It’s 10 days to the vote, so any kind of change can change the dynamics.”
McCann says the finances will be thoroughly reviewed, and one big number is still missing.
“We still don’t know with certainty what Sacramento is offering for the Kings, that’s a piece of information that hasn’t been clarified,” said McCann. “It takes a lot to undermine a deal, and we don’t have reason to think Hansen and Ballmer have any question marks."
There is also still an open legal question about the impact of a ruling in California court last week. A judge ruled a portion of Assembly Bill 900 was unconstitutional. AB900 aims to streamline construction projects and environmental review. 
“It doesn’t mean an arena wouldn’t be built, it in all likelihood slows a process down,” said McCann.
The NBA hasn’t shed light on whether the environmental review is a determining factor for Sacramento. NBA Commissioner David Stern said last week, when prompted about whether the Sacramento offer needed to be improved, “That’s not one of the issues we’re currently researching for the Owners.”
There does appear to be consensus on one point.  Sources close to the Seattle group reiterated what Johnson said today: They expect owners to settle the saga by April 19th.