SEATTLE - Sacramento has made noise, has a new arena term sheet, and momentum.
But Chris Hansen’s investment team has quietly, and methodically, continued its quest to purchase the NBA’s Kings, and move them to Seattle.
On Wednesday, Hansen entered into a purchase agreement for an additional 7 percent share of the franchise, at a cost of $15.1 million dollars. The share would give Hansen, Microsoft CEO Steve Ballmer, and the Nordstrom brothers 72 percent of the franchise, if NBA owners approve the acquisition.
The deal for the minority share has been locked up in a bankruptcy proceeding involving Kings minority Owner Bob Cook. His trustee has agreed to a “no shop” provision, which restricts the Trustee from further marketing the share.
The sale, in theory, strengthens Hansen’s position as he prepares to pitch NBA owners next week on the sale.
He and his team may also be working on his argument to move the team.
Sources close to the situation suggest the Hansen investment group is already pitching league leaders on perceived holes in the Sacramento Arena Term Sheet, just approved yesterday. That deal, approved by the Sacramento City Council 7-2 on Tuesday, lays the groundwork for a $447 million dollar arena at the Downtown Plaza. The City would fund $258 million of the cost, with another $189 million funded by private investors.
Sources say Hansen’s group is pointing to a Sacramento City Commissioned “Sports Arena Site Analysis” done back in 2004. That study, still active on the city’s website as of this writing, looked at several locations for a new Kings arena. A “Cost Comparison Matrix” showed that of seven possible locations, the Downtown Plaza site (7th and K) was the most expensive.
In fact, it listed, in 2004 numbers, a land acquisition cost of $104 million dollars, and a total project cost of $586 million dollars. That’s a difference, or shortfall, of $139 million in the current city approved non-binding financing.
The cost analysis, completed by Turner Construction at that time, suggested that “due to its existing use as an urban shopping mall, this site is expensive to purchase and prepare for construction. Demolition and construction are difficult to complete without disruption to existing businesses. In addition, there are issues associated with historical structures.
Nine years have passed, and certain conditions have changed.
JMA Ventures owns the mall, and the Term Sheet calls for the proposed arena to be built on land owned or controlled by the city and JMA. It’s unclear exactly which particular land would be used for a project. The Term Sheet also calls for the investment group to pay for any cost overruns.
But sources believe Hansen’s group could use the old study to make an argument that the math doesn’t add up.
At the same time, Hansen's group will likely argue behind the scenes, that the Seattle deal has solid city and county approved financing, and $56 million in land.
Hansen, Ballmer, the Nordstrom family have all stayed silent since the deal was announced. The Maloof family, which has agreed to sell the team, have also stayed silent. The NBA imposed gag order forbids them from talking about the deal. However, the proposed Sacramento Arena developer, and investment group, now led by Golden State Warriors minority owner Vivek Ranadive, and 24-Hour-Fitness Co-Founder Mark Mastrov, have given multiple interviews on their ‘counter bid.’
Both sides will make formal presentations to the NBA and a select group of owners next week in New York City. Sources suggest that Hansen’s group will make a strong pitch about the long term economic vitality of Seattle, and the corporate support that exists for the NBA.
Sacramento Mayor Kevin Johnson is expected to argue that the city has supported the league for nearly three decades, and the late push for a term sheet is unprecedented. He could also argue that the public subsidy is hard for the league to ignore.
NBA Owners are not likely to vote on the deal until April 18th or 19th