Stern: Sacramento arena deal 'not going to happen'

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by KING 5 News and Associated Press

KING5.com

Posted on April 13, 2012 at 9:54 AM

Updated Friday, Apr 13 at 5:12 PM

The campaign to bring the NBA back to Seattle got a shot in the arm Friday when league commissioner David Stern announced that a deal between the City of Sacramento and the NBA’s Kings over building a new arena appeared to be dead.

But whether that means the Kings will ultimately relocate, possibly to Seattle, remains to be seen.

"It's not going to happen,” Stern said of the Sacramento arena proposal during a press conference. "We have nothing further to give, to cajole, to yell, or all the various ways I've tried to keep the parties on track to get what we thought was a win win in Sacramento."

Stern's comment came after the Kings's owners -- the Maloof family -- gave an update on the project to the NBA Board of Governors and to the media in which they said they liked Sacramento but insisted the arena project was too expensive.

Later Friday, a statement from the Maloof family said talks with Sacramento Mayor Kevin Johnson today in New York were fruitless. "Despite best efforts to negotiate an agreement with the City of Sacramento, and at the conclusion of a meeting this afternoon with Mayor Johnson, he advised us that there is nothing to be gained by continued discussions at this time," said the statement.

Johnson said he heard a list of concerns from the Maloofs Friday that he said hadn't previously been disclosed. "It just feels like they were coming up with reasons of why not to do the deal," Johnson said.

Chris Hansen, the San Francisco investor who is leading an effort to build a new arena in Seattle, said the Sacramento lesson is a valuable lesson.

“This is an example of why it's important to get a deal in place with the city and county. The sooner we have that, the more able we will be to take advantage of opportunities," Hansen said.

The Maloof family and the city are at odds over the terms of a $400 million arena project. Specifically, the Kings owners are refusing to cover pre-development costs.

Friday started with news that Sacramento Mayor Kevin Johnson had reiterated that the city would not renegotiate the proposed arena deal.

In a letter to the Maloof family released late Thursday night, Johnson put pressure on the team -- and the league -- to follow through with its commitment. He said Sacramento has "done our part" and now it's up to the team to do the same, setting the stage for a critical gathering after taking the city's hardest stance yet.

"Your handshake is your handshake. Your promise is your promise," Johnson said.

The Sacramento Bee reports that Kings co-owner George Maloof on Friday also suggested a renovation of the current arena, Power Balance Paviliion, rather than construction of a new one. That would be a major switch of position after years of saying the team needed a new arena to stay in the city.

Stern said Friday that he didn't know if that was possible, but Johnson said he wouldn't support that plan.

The Kings have been widely speculated to be a team that could possibly move to Seattle if a proposed NBA arena in the city's SODO district is built.

The tentative deal

It was exactly a year ago when Johnson and the city's business leaders convinced the NBA and the Maloofs to keep the Kings from moving to Anaheim, Calif. And Sacramento's place on the NBA map seemed secure only a few weeks ago.

The two sides reached a tentative deal last month to fund the estimated $391 million arena, which would keep the team from relocating, as it almost did last year to Anaheim. The Sacramento City Council has already agreed to the city's end of the deal, brokered by the league and tentatively agreed to by the Kings.

The team has to sign off so all parties can enter into binding contracts.

Kings owners Joe, Gavin and George Maloof have since taken issue with some of the terms -- particularly environmental and pre-development costs. Under the agreement, the Kings and arena operator AEG each agreed to pay about $3.25 million in pre-development costs with the city paying the remaining $6.5 million.

George Maloof has since said that he does not believe the team should pay $3.25 million in pre-development costs because they're "playing the role of the tenant."

"We are 100% committed to moving forward under the framework laid out in the term sheet," Johnson said. "And there should be no expectation in (Friday's) conversation that this deal is subject to further negotiation. In light of these facts, the ball is in your court."

Under the non-binding term sheet, Sacramento would contribute $255.5 million, mostly by leasing out parking garages around the facility.  The Kings agreed to pay $73.25 million and arena operator AEG would contribute $58.75 million. The remaining gap would be covered by a ticket surcharge, advertising around the facility, the sale of public lands and a sponsorship campaign to sell bricks and plaques around the complex.

The NBA already put forward about $200,000 to cover the initial pre-developmental costs and keep the project on schedule.

In their statement Friday, the Maloofs said they remain committed to keeping the team in Sacramento, and pointed blame back at the city: "We only received a non-binding term sheet regarding a complex $400 million transaction 8 days before the Mayor’s deadline of March 1st. From the moment we received it, we expressed our serious concerns with many of the proposed terms and conditions.  Even now, these concerns have yet to be addressed by the City."

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