If you were to simply believe the story that most in Sacramento do, that the Maloof’s agreed to one thing in Orlando back during the NBA All-Star game in regards to a new arena and then changed their tunes as the weeks went on, I’ve got some emails between the responsible parties that you should take the time to read. But before we go all the way back to February in our way-back machine, let’s re-examine the now-infamous PowerPoint presentation from the Board of Governors meeting in New York City, specifically slides 12 and 16:
Slide 12 outlines the dates which the Maloof’s say they first brought up their concerns with the non-binding term sheet, and slide 16 highlights a quote from an unknown party that the City of Sacramento is willing to consider the Maloof’s concerns, but cannot do so at this time because of political reasons. Got that? Okay, remember that while we delve into this stack of emails I’ve obtained.
The following letter is from the law firm of Loeb & Loeb, the Southern California legal team that represents the Kings organization. It is dated February 29, 2012, and is addressed to Harvey Benjamin, the NBA point man for the Maloofs. In this document, the firm makes it perfectly clear that the family has serious concerns about the term sheet as presented at the time. First off, the Maloof’s wanted to establish specific timelines and goals for the city to lock in the financing, development, and construction of the arena. Second, the Maloofs felt it was unreasonable that they have to come up with any collateral for the deal or pay for any of the pre-development costs. Next, the family thought the non-relocation clause of the contract would violate California law, and wanted to make sure that if they sold the team the new owners wouldn’t be liable to conform with the contact they had with the city. The Maloof’s also wanted to sell Power Balance Pavilion on their own, without the city’s inference, and wanted to have final say over the proposed addition of a NHL hockey team at the new facility.
On the very same day, Harvey Benjamin sent a lengthy email to George Maloof in an effort to smooth things over for the time being. This email is the origin of the political reasons statement from slide 16. The letter also contains other eyebrow raising statements, such as:
“If you end up needing the City to refinance, we’ll (the NBA) have to arm wrestle about the collateral then. We hope we will be able to put off a finial decision regarding the collateral until some time in 2014, by which time the City will be so far down the road with the project that they will be reasonable…“
“Natomas land use provision… The City will give you very good zoning to make the land saleable. You’ll have the choice either to sell the land together with the City’s land, sell it on your own or not sell at all.“
The first above statement is alarming since it appears the NBA is betting on that if the City moves forward with construction, they’ll have no choice but to give in to the Maloof’s demands to refuse providing collateral since they’ll be too committed to the project to pull out. The second statement also is disturbing because it was widely thought that protecting the future of Natomas was paramount in the deal, but it seems the City was willing to let the Maloof’s do whatever they wanted with the land around Power Balance Pavilion, even if they didn’t want to do anything with it at all.
The very next day, the Maloof’s lawyers sent the first draft of the “redlined” term-sheet to the NBA. It outlined all of the changes the Kings wanted to the document. Remember, this is still 5 days before the City Council would vote on a document that would look vastly different than what the Maloof’s really wanted.
Once the City’s version of the non-binding term sheet became public, without any of the Kings proposed changes, the Maloof’s lawyers sent another letter to the NBA and the lobbing powerhouse Nielsen Merksamer LLP about their mounting concerns and major differences with the City on the deal.
And finally, on the same day, and perhaps in desperation that none of their concerns were being addressed, Loeb & Loeb sent the following letter to City Attorney Eileen Teichert:
Exactly one month later, Teichert abruptly resigned.
The dates on the emails above coincide precisely with slide 12 from the Maloof’s PowerPoint presentation, and back up George Maloof’s claims that they had expressed serious and specific issues with the framework for building a new arena with the City from the very beginning.
Over the past few weeks, the Maloof’s have been made into the villains in the arena saga; it’s been claimed that they backed out of the deal after agreeing to it in Orlando and then for lying to the public about their intentions. I’m not going to defend the owners of the Kings here, except to suggest you consider this possibility; the people who sold this deal to the public have yet to be honest with the citizens of Sacramento about exactly what was going on behind closed doors during this whole kerfuffle, and trust is something that’s difficult if not damned near impossible to regain once it’s lost.
Simply put, maybe you shouldn’t trust anyone who claims to know what “really” caused the arena deal to fall apart if they had anything to gain or lose from the outcome.