(from Sports Business Journal, April 8, 2013) With the NBA trying to decide between two potential suitors for the Sacramento Kings, the league is looking at each suitor’s financial plans. The group of investors wishing to keep the team in Sacramento include, Pittsburg Penguins owner Ron Burkle, software tycoon and Golden State Warriors co-chair Vivek Ranadivé, and 24 Hour Fitness founder Mark Mastrov. This group plans on building a new $445 million arena. Along with purchasing the team, this business venture totals around $1 billion, and the group wishes to execute this with very little debt.
On the other hand, the Seattle group of investors, led by hedge fund manager Chris Hansen and Microsoft CEO Steve Ballmer, plans on acquiring the Kings and building a new $525 million arena through an extensive debt financing system. This system would include public funds of $125 million and carry $250 million to $300 million in debt-the group has already started reaching out to banks. The Seattle group has already poured significant funds into this business venture with the purchase of land for the arena in addition to the equity needed for the proposed stadium and purchase of the Kings themselves. That being said, the Seattle group plans on using very little of its own money from here going forward, thus their extensive debt financing plan.
Though it appears the Sacramento group’s deal may be more favorable and less laden with debt, the Seattle group could have the upper hand in landing the Kings. Seattle would absorb the $77 million in existing debt of the current Kings arena; they already have a purchase agreement in place with the Maloof family, owners of the Kings, and a deal in place with the city of Seattle for a new arena.
It appears, as of now, the Seattle group is fast approaching the point at which they will officially purchase the Kings from the Maloof family and begin construction of their new arena in Seattle. However, both groups are waiting for the official word from the NBA for its approval to move forward with their plans.