The twisted saga that is the Sacramento Kings has taken another turn. his time the turn would help keep the team in Sacramento or it could guarantee that Hansen and his group could end up owning, and relocating, the franchise. This time, the turn revolves around a 7% minority stake in the Kings ownership.
When the Maloofs took over majority ownership of the Kings, they agreed to many stipulations that were originally laid out by Thompson’s ownership group in 1991. One of these stipulations is that the minority owners have the right to use the “first right of refusal to sell”. Now what this means is that the minority owners, after they have been notified of a sale, can refuse to sell the franchise and buy out the majority owners. In fact, Michael Jordan used that clause to purchase the Bobcats and keep them in Charlotte in 2010.
It appears that the Maloofs have not officially notified the minority share holders that they have reached an agreement with Chris Hansen. This is a violation of league rules and it is denying the minority owners their right to first refusal; in other words, the Maloofs are Maloofing themselves again. And this time, it affects the ability of the Maloofs to sell the Kings to Chris Hansen; or does it?
That’s where Bob Cook’s seven percent share comes into effect. Cook recently declared bankruptcy and as a result his minority stake in the Kings is going to be put up for auction. Actually, it’s the bankruptcy lawyer who is in charge of Cook’s share that points out that the minority owners have the first right of refusal. This auction could seal the Kings relocation to Seattle; or it could keep the Kings in Sacramento under new ownership.
Whomever wins this auction earns the right to refuse the Maloofs sale, and then match it. Basically that means that any of the large equity partners rumored to be involved in keeping the Kings in Sacramento could end up buying the team right from under Hansen’s nose. The other outcome is that Hansen or Ballmer jump into this bankruptcy auction and outbid everyone else for that seven percent stake.
If that were to happen, it would be up to one of the Kings other minority owners to step in and match the offer from Hansen and Ballmer. And if the other minority owners are unable to step up, Hansen and Ballmer would become the majority owners, the Kings would be on their way to Seattle.
It will be interesting to see how this all shakes out and who manages to buy the stake. This very well could end up deciding whether or not the Kings become the new Sonics. Or the Maloofs could be idiots and push this sale through without even going through with their contractual obligations; in other words, break their contracts and face probable law suits from minority owners.
Update 1/25/13, 12:49 pm:
It sounds like the Minority owners who get the first chance to refuse the sale are those with the largest stake left. That would mean that Joe Benvenuti (13%) and Gregg Lukenbill (12%) would get first crack at matching Hansen’s offer. Benvenuti is rumored to be worth $500 million.
“It is important the community knows we are making the effort to keep the team in town,” Cook said. “Gregg Lukenbill, Joe Benvenuti and I spent years of hard work bringing the team to Sacramento, and we are not going to let it leave Sacramento without a fight.”-Sacramento Bee
It’s interesting to see that Cook is still heavily involved in trying to keep the Kings in Sacramento, despite the fact that his share has defaulted to bankruptcy. Basically this means that Sacramento has an even better shot at keeping the Kings; especially with KJ getting to present to the Board of Governors.