7% Of Kings Could Hit Auction Block

Dale Kasler of the Sacramento Bee reports that a 7 percent stake in the Sacramento Kings could be auctioned soon as a part of Bob Cook's bankruptcy proceeding. Cook was one of the original partners who brought the Kings to Sacramento in 1985; there are a couple others still floating around. Cook is apparently in bankruptcy proceedings because he struck out with the Le Rivage hotel in recent years.

As Kasler notes, the interest in the sale of Cook's piece will come in determining the value of the franchise. While it's not perfectly clean to extrapolate the value of Cook's 7 percent stake out to the full franchise value (or the Maloofs' 53 percent stake), simply because the value of majority ownership of an NBA franchise is far, far greater than the value of small minority ownership. But if the 7 percent goes for, say, more than $21 million, it'd be a good indication that the value of the franchise is greater than $300 million. Basically, the sale price of this stake divided by 7 percent is a good indicator of the baseline -- the bottom range -- of the Kings' franchise value.

The question that remains for me: why didn't Cook sell the stake directly back to the Maloofs before filing for bankruptcy to get some liquidity? As noted in Kasler's piece, the benefits of owning a minority stake are nearly totally cosmetic and honorary. Seems like something easy to concede.

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