FanPost

On time delays and Bob Cook's bankruptcy case

As the Zillerbot has already noted, the Bee reported Tuesday that the trustee running Sacramento Kings minority owner Bob Cook's bankruptcy will bring in a special litigation counsel to pursue the right of first refusal issue. The trustee, David Flemmer, is trying to sell Cook's assets for the highest price possible. The 7 percent stake in the Kings that Cook owned and used as collateral for a loan he's defaulted on is much more valuable, says Flemmer, if there is a right of first refusal that is respected in the sale of the team.

This is a good thing.

Stealing this blurb from Capt. Factoid (believe he is an StR member but the comment is from over at Kingsfans)

The simple way to look at the whole thing is like this.

1. The Maloofs are selling. They are out. They need the money (perhaps to try to buy back into the Palms), and they can't afford to sink cash into a team that's currently losing money any longer than necessary.

2. The Maloofs are trying to sell to Hansen's group without giving Sacramento a chance because they are vindictive jerks who didn't like it when KJ ruined their plans to move to Anaheim, which would have allowed them to sell the franchise for even more than they're selling it for now. They don't like that KJ went in front of the BOG, showed them up, and detailed how they had been sandbagging the team in order to make a case that Sacramento wasn't profitable.

3. But, see #1. 4. Sacramento is not going gently into that good night. Sacramento has potentially three avenues whereby they can hope to nullify the Hansen agreement.

4A. The NBA BOG has to approve the sale to the Hansen group. Due to Sacramento coming up solidly in NBA-requested arena efforts (amongst other reasons) the NBA may well reject the Hansen deal. And they might take a while in doing it.

4B. The minority owners' contractual right of first refusal appears to have been violated by the Maloofs. The minority owners want the team to stay in Sacramento, and can tie the sale up in the courts, whether or not they can actually make the purchase.

4C. The city's $25M stake in the franchise may also be a stumbling block for the Maloofs to sell the franchise without consent.

5. All of the scenarios in #4, while they might ultimately fail to prevent a sale to the Hansen group, will certainly DELAY a sale to the Hansen, possibly tying it up in courts for years.

6. As an alternative to tying the sale up for years in the courts, KJ is going to be presenting an alternate ownership group who will (presumably) match the Hansen offer and keep the team in Sacramento. The NBA BOG, minority owners, and city will consent to this sale and not tie it up for years in the courts.

7. Thus, the Maloofs will succeed in accomplishing #1, the sale, much more quickly if they just give up on #2. They may even have no choice at all given their financial situation.

8. Hansen may not be happy, but to avoid anything dragging out further, the NBA will offer him an expansion franchise as long as he plays nice.

9. Everybody wins, except for the Maloofs who don't get their vengeance.

This didn’t really doesn't address the whole auction but I think it brings up good big picture stuff. Goin bench_blob for a moment here but I've been touting the whole BOG match thing for awhile now. However, to be honest, do we really even know whether the BOG will give us that chance? Antitrust is a serious threat and the league has to be careful to make sure not to run afoul of the waiver of recourse agreements between them and their franchise owners. I know that doesn’t sound right but technically although franchise owners sign off that they won’t sue the league, the league needs to hold up a minimum standard of due process and can’t act arbitrarily or capriciously. But we have no idea what the heck is in their bylaws in regards to team purchase and relocation review. We have no idea what kind of discretion they have, are they able to review Ballmer versus Burkle or do they just look at whether the specific application is okay?

As much as I thought it was our best shot or great (ug I hate that I wrote that) it's just in comparison to everything else we saw as available. It's a hailmary prayer. Stern doesn't vote, he just offers his opinion (and can offer whatever investigatory information he has on Sacramento and Maloofery). KJ can give a presentation (and hope he doesn't just go in there thinking he's the man because of last time). Hansen can give a presentation. And the lawyers are going to explain the potential pitfalls in the process.

And I'm concerned because you got recent market issues in Sacramento, you have revenue sharing issues, and you got potential RSN revenues from up North and serious bidders. I don't think the fact Sacramento did everything as a city somehow switches the burden here, Hansen seems to have hit all the deal points with the relocation committee working on the deal and I think we're the ones behind Seattle right now. And let's not forget that there are owners themselves who have their own arena fights coming and want to keep their leverage and their threats intact. Big markets want a smaller percentage of the burden carrying smaller markets and small markets with upcoming arena issues want to keep their leverage in their own squabbles and need the threat of "If I personally don’t get what I want I am out!"

And to me the biggest issue is if they deny the sale, they got absolute wild cards in the Maloofs on their side and now they got $30 million to keep themselves afloat until the offseason when they finally get their revenue sharing cash. I think Chris Lehane and Bignerd said it best, the Maloofs are the North Korea and terrorists of the NBA. Obviously that's some insane hyperbole but these guys are erratic, desperate, litigious, dip shits that have dragged the NBA throw this crap year after year after year. The league wants to get rid of the headache and the more direct route the better. Deny them the move and embarrass them and they have $30 million to help them stay afloat?

Don’t get me wrong, love KJ and all, but the guy might be walking right into a wood chipper. He’d do it with confidence and a jump in his step but still it’s a wood chipper.

So yes, I love this. You hopefully can stop the $30 million payment and put those fuckers in a bind financially if this drags on. The Maloofs were going to make a cash call because they are broke as shit and the minority owners weren't going for it. If the trustee files an injunction and stops any transfer of cash from happening until late April or early May, they have already maxed out all of their borrowing capacity and they need cash in hand soon just to keep the business in a position to pay its bills. Some around here have also heard the revenue sharing money from the NBA did not come in during the time frame they had expected coupled with ticket sales and corporate money down significantly from where they budgeted (or so I'm told).

Oh and just in general, this buys more time. Time is good. We need time. Hanson had a head start.

So I personally love it. Obviously the most important part is the right of first refusal in general. If our minority owners step up, holy shit that's a game changer. Screw the BOG, I wanna be like Mike. I personally think that's different from a lame duck two years situation Bennett was facing with Seattle. This goes to the heart of franchise agreements. And if the league says heck no to the first right of refusal being able to be used, well then we’re screwed no matter what frankly.

And if the right of first refusal is the Real McCoy, dear lord people in charge jump on it now because our only other shot was a prayer before this. Going to nerd out here but I get why Han Solo went into that asteroid field even though the odds were 3,720 to 1 but come on, the guy had like three star destroyers after him and no hyper drive. HE HAD TO! But dear lord, if he had hyper drive, WHAT THE HELL ARE YOU DOING HAN SOLO!?! AND WHY ARE YOU TALKING TO A GIANT BABBLING FUR BALL!?!

You introduce this, now the Maloofs aren't the only wild card in the room. Hell, we can get rid of the Maloofs for the league ourselves and if they play chicken and hold out, they potentially ride dangerously close to issues with the best interest clause without the February 1st $30 million payment in hand. Remember, there are stipulations in the franchise agreements and an owner must be able to meet financial obligations and yes the league absolutely has the right to step in. It’s pretty much the only time the league can whip out the best interest clause on the owner without some form of special BOG vote because there frankly aren’t any other options period.

Now the league has some tough decisions to make on BOTH ends here. We bring the carrots and the sticks. You sell? Fine, HERE WE BUY.

(This is a FanPost from a member of the Sactown Royalty community. The views expressed come from the member, and not Sactown Royalty staff.)

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