Burkle's Sole Focus is Now Downtown Development, Sacramento Group Plans For Much Less Debt than Seattle

Photo via Mike Tavares, Crown Downtown

A report today indicates that Ron Burkle has decided to focus solely on development around arena while another report indicates that the Sacramento group is planning to be much less leveraged than Seattle.

News has been relatively slow since last week's Board of Governors meeting that both groups from Sacramento and Seattle attended to make their respective pitches.

Today, however, the Sacramento Bee has learned that some of the NBA owners were worried that Ron Burkle's involvement in Sacramento's bid could lead to a potential conflict of interest. That conflict of interest is because Burkle is a part owner of Relativity Sports, an athlete management firm that features clients such as Amare Stoudemire, John Wall and some guy named DeMarcus Cousins.

As such, Burkle has decided to not buy into the team or arena side and instead focus on building the downtown arena focus on developing around the arena. This isn't expected to be a problem considering that Burkle was never going to be a large player on the team side anyway. In fact, it alleviates some headaches, notably the above conflict of interest and the fact that the Maloofs reportedly do not want to have any business dealings with Burkle, who they partially blame for ruining their attempted relocation to Anaheim in 2011.

In other arena related news, an article in the Sports Business Journal indicates that the Seattle groups offers for both the Kings and their arena deal are heavily leveraged.

That facility would get $125 million of public funds, but of the remaining $400 million in private funds, the Hansen group plans to carry $250 million to $300 million of debt and has begun reaching out to banks for that financing, according to sources familiar with the offer. The Hansen group also plans to use the full amount of debt possible on an NBA franchise and its holding company under league rules. That amount is $175 million. That would mean there could be nearly half a billion dollars of debt on the enterprise.

Meanwhile, Sacramento's group plans to use much more equity up front, according to Mark Mastrov, who is quoted as saying:

"We will equitize it," said Mastrov after he presented his group's bid to the NBA in New York last week. He noted that his own business, 24 Hour Fitness, has little debt. "We don't like debt in my business, and the same will go for the Kings," he said.

That doesn't mean Sacramento will be entirely without debt. They will still have to take on the $77 million loan to the city of Sacramento, although that won't have to be paid off immediately like it would if Seattle bought and moved the team.

UPDATE 2:13 PM:

It appears that Ron Burkle is now no longer putting up equity for the team OR the arena as both violate the conflict of interest. The Mayor said at a Press Conference today that Burkle would be indirectly involved with development around the arena, and Vivek and Mastrov are now the lead investors on everything, arena included. The Mayor says everyone knew this could be a potential issue, and it was brought up at last week's meetings. He said that the NBA's concerns were satisfied at the Board of Governor's meeting and that this doesn't slow down Sacramento's efforts. The Mayor also added that they're might be a "wrinkle or two" with the ownership group in the next couple days.

UPDATE 4:06 PM:

Per Ryan Lillis, the Jacobs Family's involvement has now grown on both the team and arena side's following Burkle's departure, although Vivek is still the lead investor. The Family also put out this statement, their first since being revealed as part of the Sacramento bid:

Our family is truly honored and excited to be a part of this amazing team. When Vivek asked us to join we didn't hesitate to jump in. We have worked with Vivek for years and knew this was an opportunity to be part of something very special. California is our home and we are thrilled to join Vivek and Mark in their efforts to keep the Kings in California and revitalize Sacramento.

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