More snags in the path of Kings’ move
SACRAMENTO, Calif. – Thursday brought another potential snag in the sale of the Sacramento Kings to a group that would relocate them to Seattle.
The Sacramento Bee reported that a bankruptcy trustee who controls 7 percent of the Kings says the team’s limited partners are being denied their legal right to match a Seattle group’s purchase offer for the team.
The Bee reported that the trustee claims the limited partners have a “right of first refusal to buy the club” and that it could present a significant legal challenge in the efforts of the current owners, the Maloof family, to sell the team to the group from Seattle.
“It’s going to create a little bit more mess up in Seattle,” said Sacramento Mayor Kevin Johnson. “It’s mucking it up a little bit.”
Johnson made those remarks during his third straight afternoon news conference designed to publicize the efforts the city is making to save the team. Johnson said the news of the potential right of first refusal of the limited partners was not part of his strategy. But observers said there’s little doubt it could help Sacramento.
“Whenever bankruptcy court gets involved, it complicates things exponentially,” said Neil deMause of the website FieldofSchemes, which tracks sports arena/stadium issues.
A Seattle group led by Chris Hansen and Microsoft CEO Steve Ballmer announced Monday it had a binding agreement to purchase 65 percent of the Kings, including a 53 percent share held by the controlling owners, the Maloof family.
The other 35 percent is held by four different entities, including a 7 percent share owned by limited partner Bob Cook that is in bankruptcy.
The Bee reported that David Flemmer, the court-appointed trustee overseeing the share, said Cook and other minority owners have “first right of refusal” to buy the club. The Bee reported Flemmer said that right is guaranteed in the partnership agreements governing ownership of the team.
The Bee further reported that Flemmer said that means the limited partners should be allowed to match the deal agreed to by the Maloofs and Hansen.
Flemmer said he plans to assert the limited partners’ rights at a hearing next Thursday in U.S. Bankruptcy Court in Sacramento, according to the Bee.
“Bankruptcy is a tool; this tool can be effective,” Flemmer told the Bee. “We are very, very, very concerned that there’s a deal being cut that’s going to (ignore) that right.”
The Bee reported that a source close to the Maloofs said recently that the family doesn’t believe the limited partners have a right of first refusal.
Flemmer is holding an auction for Cook’s 7 percent share of the team to pay off Cook’s creditors. If the limited partners are denied the right to match Hansen’s offer, that diminishes the value of the Cook share, he said, according to the Bee.
Johnson is attempting to assemble an ownership group that can make what he calls a “competitive” counteroffer to the agreement reached by Hansen.
Hansen’s group has agreed to pay $341 million for a 65 percent share of the team.