Monday, May 20, 2013

What Kings Deal Means for the NBA

After much talk about the Kings future. A decision was finally made. After an apparent deal was done to move the team to Seattle, residents of Sacramento were not happy. The Maloofs brothers were being pressured to keep the team in Sacramento. The situation was tense because Seattle lost an NBA franchise and was hungry for a return team. Sacramento has been home to a loyal fan base that was supportive of its team.

The bid for the team to move to Seattle was in place, as I wrote about previously. Later Sacramento made a push to keep the Kings, an argument they ultimately won. The NBA owners officially voted to reject the bid to move the team to Seattle and keep the team in Sacramento. This decision was able to be made after billionaire Vivek Ranadive came to an agreement to purchase 65 percent of the Kings and keep them in Sacramento.

Dollars Behind the Deal
Ranadive will pay $348 million for his 65 percent stake in the team. Ranadive already put $200 million in an escrow account before the deal in anticipation of the deal getting done. The total valuation of the sale will be $535 million.

The team owed money to the city of Sacramento and the NBA, a total of $60 million. After taking that debt into account, the Maloff brothers were able to make about $200 million for their share of the team.

Ranadive secured about $250 million from Sacramento public officials toward a potential new Kings arena.
Vivek Ranadive

What it Means for the League
The sale of the Kings for $535 million set a record for the National Basketball Association. From the year 2012 to 2013, the average value of an NBA team rose 30%. A lot of the reason for the increase in value has to do with new stadiums and a television contract worth more money.

At the end of the 2011 calendar year, Joshua Harris and his group purchased the Philadelphia 76ers. It is diffiuclt to imagine that they paid only $280 million for the team. Looks like a pretty good investment right now.

Final Thought
With the rapid growth of the league, expansion has to be looked upon seriously. Although Sacramento was ultimately successful in winning the team, Seattle put up a good fight. The bid for the team to move to Seattle was more than respectable. The obvious interest in having a team in Seattle must be looked at seriously by the NBA. The NBA in the past has avoided talk of expansion but now is the time where it should be looked at because of the increasing revenue value of each team.


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